But if this first expedient shows how naturally a "fiat" money system runs into despotism, the next is no less instructive in showing how easily it becomes repudiation and dishonor.

As we have seen, the first issue of the assignats,—made by the National Assembly, bore a portrait of the king; but on the various issues after the establishment of a republic this emblem had been discarded. This change led to a difference in value between the earlier and the later paper money. The wild follies of fanatics and demagogues had led to an increasing belief that the existing state of things could not last; that the Bourbons must ere long return; that in such case, while a new monarch would repudiate all the vast mass of the later paper issued by the Republic, he would recognize that first issue bearing the face and therefore the guarantee of the king. So it was that this first issue came to bear a higher value than those of later date. To meet this condition of things it was now proposed to repudiate an that earlier issue. In vain did sundry more thoughtful members of the Convention plead that this paper money, amounting to five hundred and fifty-eight millions of francs, bore the solemn guarantee of the nation, as well as of the king; the current was irresistible. All that Cambon, the great leader of finance at that time, could secure was a clause claiming to protect the poor, to the effect that this demonetization should not extend to notes below a hundred francs in value; and it was also agreed that any of the notes, large or small, might be received in payment of taxes and for the confiscated property of the clergy and nobility. To all the arguments advanced against this breach of the national faith Danton, then at the height of his power, simply declared that only aristocrats could favor notes bearing the royal portrait, and gave forth his famous utterance: "Imitate Nature, which watches over the preservation of the race but has no regard for individuals." The decree was passed on the 31st of July, 1793, yet its futility was apparent in less than two months, when the Convention decreed that there should be issued two thousand millions of francs more in assignats between the values of ten sous and four hundred francs, and when, before the end of the year, five hundred millions more were authorized. [47]

The third outgrowth of the vast issue of fiat money was the Maximum. As far back as November, 1792, the Terrorist associate of Robespierre, St. Just, in view of the steady rise in prices of the necessaries of life, had proposed a scheme by which these prices should be established by law, at a rate proportionate to the wages of the working classes. This plan lingered in men's minds, taking shape in various resolutions and decrees until the whole culminated on September 29, 1793, in the Law of the Maximum.

While all this legislation was high-handed, it was not careless. Even statesmen of the greatest strength, having once been drawn into this flood, were borne on into excesses which, a little earlier, would have appalled them. Committees of experts were appointed to study the whole subject of prices, and at last there were adopted the great "four rules" which seemed to statesmen of that time a masterly solution of the whole difficulty. [48]

First, the price of each article of necessity was to be fixed at one and one-third its price in 1790. Secondly, all transportation was to be added at a fixed rate per league. Thirdly, five per cent was to be added for the profit of the wholesaler. Fourthly, ten per cent was to be added for the profit of the retailer. Nothing could look more reasonable. Great was the jubilation. The report was presented and supported by Barrere,—"the tiger monkey,"—then in all the glory of his great orations: now best known from his portrait by Macaulay. Nothing could withstand Barrere's eloquence. He insisted that France had been suffering from a "Monarchical commerce which only sought wealth," while what she needed and what she was now to receive was a "Republican commerce—a commerce of moderate profits and virtuous." He exulted in the fact that "France alone enjoys such a commerce,—that it exists in no other nation." He poured contempt over political economy as "that science which quacks have corrupted, which pedants have obscured and which academicians have depreciated." France, he said, has something better, and he declared in conclusion, "The needs of the people will no longer be spied upon in order that the commercial classes may arbitrarily take advantage." [49]

The first result of the Maximum was that every means was taken to evade the fixed price imposed, and the farmers brought in as little produce as they possibly could. This increased the scarcity, and the people of the large cities were put on an allowance. Tickets were issued authorizing the bearer to obtain at the official prices a certain amount of bread or sugar or soap or wood or coal to cover immediate necessities. [50]

But it was found that the Maximum, with its divinely revealed four rules, could not be made to work well—even by the shrewdest devices. In the greater part of France it could not be enforced. As to merchandise of foreign origin or merchandise into which any foreign product entered, the war had raised it far above the price allowed under the first rule, namely, the price of 1790, with an addition of one-third. Shopkeepers therefore could not sell such goods without ruin. The result was that very many went out of business and the remainder forced buyers to pay enormous charges under the very natural excuse that the seller risked his life in trading at all. That this excuse was valid is easily seen by the daily lists of those condemned to the guillotine, in which not infrequently figure the names of men charged with violating the Maximum laws. Manufactures were very generally crippled and frequently destroyed, and agriculture was fearfully depressed. To detect goods concealed by farmers and shopkeepers, a spy system was established with a reward to the informer of one-third of the value of the goods discovered. To spread terror, the Criminal Tribunal at Strassburg was ordered to destroy the dwelling of any one found guilty of selling goods above the price set by law. The farmer often found that he could not raise his products at anything like the price required by the new law, and when he tried to hold back his crops or cattle, alleging that he could not afford to sell them at the prices fixed by law, they were frequently taken from him by force and he was fortunate if paid even in the depreciated fiat money—fortunate, indeed, if he finally escaped with his life. [51]

Involved in all these perplexities, the Convention tried to cut the Gordian knot. It decreed that any person selling gold or silver coin, or making any difference in any transaction between paper and specie, should be imprisoned in irons for six years:—that any one who refused to accept a payment in assignats, or accepted assignats at a discount, should pay a fine of three thousand francs; and that any one committing this crime a second time should pay a fine of six thousand francs and suffer imprisonment twenty years in irons. Later, on the 8th of September, 1793, the penalty for such offences was made death, with confiscation of the criminal's property, and so reward was offered to any person informing the authorities regarding any such criminal transaction. To reach the climax of ferocity, the Convention decreed, in May, 1794, that the death penalty should be inflicted on any person convicted of "having asked, before a bargain was concluded, in what money payment was to be made." Nor was this all. The great finance minister, Cambon, soon saw that the worst enemies of his policy were gold and silver. Therefore it was that, under his lead, the Convention closed the Exchange and finally, on November 13, 1793, under terrifying penalties, suppressed all commerce in the precious metals. About a year later came the abolition of the Maximum itself. [52]

It is easily seen that these Maximum laws were perfectly logical. Whenever any nation intrusts to its legislators the issue of a currency not based on the idea of redemption in standard coin recognized in the commerce of civilized nations, it intrusts to them the power to raise or depress the value of every article in the possession of every citizen. Louis XIV had claimed that all property in Prance was his own, and that what private persons held was as much his as if it were in his coffers. But even this assumption is exceeded by the confiscating power exercised in a country, where, instead of leaving values to be measured by a standard common to the whole world, they are left to be depressed or raised at the whim, caprice or interest of a body of legislators. When this power is given, the power of prices is inevitably included in it. [53]

It may be said that these measures were made necessary by the war then going on. Nothing could be more baseless than such an objection. In this war the French soon became generally successful. It was quickly pushed mainly upon foreign soil. Numerous contributions were levied upon the subjugated countries to support the French armies. The war was one of those in which the loss, falling apparently on future generations, first stimulates, in a sad way, trade and production. The main cause of these evils was tampering with the circulating medium of an entire nation; keeping all values in fluctuation; discouraging enterprise; paralyzing energy; undermining sobriety; obliterating thrift; promoting extravagance and exciting riot by the issue of an irredeemable currency. The true business way of meeting the enormous demands on France during the first years of the Revolution had been stated by a true statesman and sound financier, Du Pont de Nemours, at the very beginning. He had shown that using the same paper as a circulating medium and as a means for selling the national real estate was like using the same implement for an oyster knife and a razor. [54]

It has been argued that the assignats sank in value because they were not well secured,—that securing them on government real estate was as futile as if the United States had, in the financial troubles of its early days, secured notes on its real estate. This objection is utterly fallacious. The government lands of our country were remote from the centers of capital and difficult to examine; the French national real estate was near these centers—even in them—and easy to examine. Our national real estate was unimproved and unproductive; theirs was improved and productive—its average productiveness in market in ordinary times being from four to five per cent. [55]

It has also been objected that the attempt to secure the assignats on government real estate failed because of the general want of confidence in the title derived by the purchasers from the new government. Every thorough student of that period must know that this is a misleading statement. Everything shows that the vast majority of the French people had a fanatical confidence in the stability of the new government during the greater part of the Revolution. There were disbelievers in the security of the assignats just as there were disbelievers in the paper money of the United States throughout our Civil War; but they were usually a small minority. Even granting that there was a doubt as to investment in French lands, the French people certainly had as much confidence in the secure possession of government lands as any people can ever have in large issues of government bonds: indeed, it is certain that they had far more confidence in their lands as a security than modern nations can usually have in large issues of bonds obtained by payments of irredeemable paper. One simple fact, as stated by John Stuart Mill, which made assignats difficult to convert into real estate was that the vast majority of people could not afford to make investments outside their business; and this fact is no less fatal to any attempt to contract large issues of irredeemable paper—save, perhaps, a bold, statesmanlike attempt, which seizes the best time and presses every advantage, eschewing all juggling devices and sacrificing everything to maintain a sound currency based on standards common to the entire financial world.

And now was seen, taking possession of the nation, that idea which developed so easily out of the fiat money system;—the idea that the ordinary needs of government may be legitimately met wholly by the means of paper currency;—that taxes may be dispensed with. As a result, it was found that the assignat printing press was the one resource left to the government, and the increase in the volume of paper money became every day more appalling.

It will doubtless surprise many to learn that, in spite of these evident results of too much currency, the old cry of a "scarcity of circulating medium" was not stilled; it appeared not long after each issue, no matter how large.

But every thoughtful student of financial history knows that this cry always comes after such issues—nay, that it must come,—because in obedience to a natural law, the former scarcity, or rather insufficiency of currency recurs just as soon as prices become adjusted to the new volume, and there comes some little revival of business with the usual increase of credit. [56]

In August, 1793, appeared a new report by Cambon. No one can read it without being struck by its mingled ability and folly. His final plan of dealing with the public debt has outlasted all revolutions since, but his disposition of the inflated currency came to a wretched failure. Against Du Pont, who showed conclusively that the wild increase of paper money was leading straight to, ruin, Cambon carried the majority in the great assemblies and clubs by sheer audacity—the audacity of desperation. Zeal in supporting the assignats became his religion. The National Convention which succeeded the Legislative Assembly, issued in 1793 over three thousand millions of assignats, and, of these, over twelve hundred millions were poured into the circulation. And yet Cambon steadily insisted that the security for the assignat currency was perfect. The climax of his zeal was reached when he counted as assets in the national treasury the indemnities which, he declared, France was sure to receive after future victories over the allied nations with which she was then waging a desperate war. As patriotism, it was sublime; as finance it was deadly. [57]

Everything was tried. Very elaborately he devised a funding scheme which, taken in connection with his system of issues, was in effect what in these days would be called an "interconvertibility scheme" By various degrees of persuasion or force,—the guillotine looming up in the background,—holders of assignats were urged to convert them into evidence of national debt, bearing interest at five per cent, with the understanding that if more paper were afterward needed more would be issued. All in vain. The official tables of depreciation show that the assignats continued to fall. A forced loan, calling in a billion of these, checked this fall, but only for a moment. The "interconvertibility scheme" between currency and bonds failed as dismally as the "interconvertibility scheme" between currency and land had failed. [58]

A more effective expedient was a law confiscating the property of all Frenchmen who left France after July 14, 1789, and who had not returned. This gave new land to be mortgaged for the security of paper money.

All this vast chapter in financial folly is sometimes referred to as if it resulted from the direct action of men utterly unskilled in finance. This is a grave error. That wild schemers and dreamers took a leading part in setting the fiat money system going is true; that speculation and interested financiers made it worse is also true: but the men who had charge of French finance during the Reign of Terror and who made these experiments, which seem to us so monstrous, in order to rescue themselves and their country from the flood which was sweeping everything to financial ruin were universally recognized as among the most skillful and honest financiers in Europe. Cambon, especially, ranked then and ranks now as among the most expert in any period. The disastrous results of all his courage and ability in the attempt to stand against the deluge of paper money show how powerless are the most skillful masters of finance to stem the tide of fiat money calamity when once it is fairly under headway; and how useless are all enactments which they can devise against the underlying laws of nature.

Month after month, year after year new issues went on. Meanwhile everything possible was done to keep up the value of paper. The city authorities of Metz took a solemn oath that the assignats should bear the same price whether in paper or specie,—and whether in buying or selling, and various other official bodies throughout the nation followed this example. In obedience to those who believed with the market women of Paris, as stated in their famous petition, that "laws should be passed making paper money as good as gold," Couthon, in August, 1793, had proposed and carried a law punishing any person who should sell assignats at less than their nominal value with imprisonment for twenty years in chains, and later carried a law making investments in foreign countries by Frenchmen punishable with death. [59]

But to the surprise of the great majority of the French people, the value of the assignats was found, after the momentary spasm of fear had passed, not to have been permanently increased by these measures: on the contrary, this "fiat" paper persisted in obeying the natural laws of finance and, as new issues increased, their value decreased. Nor did the most lavish aid of nature avail. The paper money of the nation seemed to possess a magic power to transmute prosperity into adversity and plenty into famine. The year 1794 was exceptionally fruitful: and yet with the autumn came scarcity of provisions and with the winter came distress. The reason is perfectly simple. The sequences in that whole history are absolutely logical. First, the Assembly had inflated the currency and raised prices enormously. Next, it had been forced to establish an arbitrary maximum price for produce. But this price, large as it seemed, soon fell below the real value of produce; many of the farmers, therefore, raised less produce or refrained from bringing what they had to market. [60] But, as is usual in such cases, the trouble was ascribed to everything rather than the real cause, and the most severe measures were established in all parts of the country to force farmers to bring produce to market, millers to grind and shopkeepers to sell it. [61] The issues of paper money continued. Toward the end of 1794 seven thousand millions in assignats were in circulation. [62] By the end of May, 1795, the circulation was increased to ten thousand millions, at the end of July, to fourteen thousand millions; and the value of one hundred francs in paper fell steadily, first to four francs in gold, then to three, then to two and one-half. [63] But, curiously enough, while this depreciation was rapidly going on, as at various other periods when depreciation was rapid, there came an apparent revival of business. The hopes of many were revived by the fact that in spite of the decline of paper there was an exceedingly brisk trade in all kinds of permanent property. Whatever articles of permanent value certain needy people were willing to sell certain cunning people were willing to buy and to pay good prices for in assignats. At this, hope revived for a time in certain quarters. But ere long it was discovered that this was one of the most distressing results of a natural law which is sure to come into play under such circumstances. It was simply a feverish activity caused by the intense desire of a large number of the shrewder class to convert their paper money into anything and everything which they could hold and hoard until the collapse which they foresaw should take place. This very activity in business simply indicated the disease. It was simply legal robbery of the more enthusiastic and trusting by the more cold-hearted and keen. It was, the "unloading" of the assignats upon the mass of the people. [64]

Interesting is it to note in the midst of all this the steady action of another simple law in finance. Prisons, guillotines, enactments inflicting twenty years' imprisonment in chains upon persons twice convicted of buying or selling paper money at less than its nominal value, and death upon investors in foreign securities, were powerless. The National Convention, fighting a world in arms and with an armed revolt on its own soil, showed titanic power, but in its struggle to circumvent one simple law of nature its weakness was pitiable. The louis d'or stood in the market as a monitor, noting each day, with unerring fidelity, the decline in value of the assignat; a monitor not to be bribed, not to be scared. As well might the National Convention try to bribe or scare away the polarity of the mariner's compass. On August 1, 1795, this gold louis of 25 francs was worth in paper, 920 francs; on September 1st, 1,200 francs; on November 1st, 2,600 francs; on December 1st, 3,050 francs. In February, 1796, it was worth 7,200 francs or one franc in gold was worth 288 francs in paper. Prices of all commodities went up nearly in proportion. [65] The writings of this period give curious details. Thibaudeau, in his Memoirs, speaks of sugar as 500 francs a pound, soap, 230 francs, candles, 140 francs. Mercier, in his lifelike pictures of the French metropolis at that period, mentions 600 francs as carriage hire for a single drive, and 6,000 for an entire day. Examples from other sources are such as the following:—a measure of flour advanced from two francs in 1790, to 225 francs in 1795; a pair of shoes, from five francs to 200; a hat, from 14 francs to 500; butter, to, 560 francs a pound; a turkey, to 900 francs. [66] Everything was enormously inflated in price except the wages of labor. As manufacturers had closed, wages had fallen, until all that kept them up seemed to be the fact that so many laborers were drafted off into the army. From this state of things came grievous wrong and gross fraud. Men who had foreseen these results and had gone into debt were of course jubilant. He who in 1790 had borrowed 10,000 francs could pay his debts in 1796 for about 35 francs. Laws were made to meet these abuses. As far back as 1794 a plan was devised for publishing official "tables of depreciation" to be used in making equitable settlements of debts, but all such machinery proved futile. On the 18th of May, 1796, a young man complained to the National Convention that his elder brother, who had been acting as administrator of his deceased father's estate, had paid the heirs in assignats, and that he had received scarcely one three-hundredth part of the real value of his share. [67] To meet cases like this, a law was passed establishing a "scale of proportion." Taking as a standard the value of the assignat when there were two billions in circulation, this law declared that, in payment of debts, one-quarter should be added to the amount originally borrowed for every five hundred millions added to the circulation. In obedience to this law a man who borrowed two thousand francs when there were two billions in circulation would have to pay his creditors twenty-five hundred francs when half a billion more were added to the currency, and over thirty-five thousand francs before the emissions of paper reached their final amount. This brought new evils, worse, if possible, than the old. [68]

The question will naturally be asked, On whom did this vast depreciation mainly fall at last? When this currency had sunk to about one three-hundredth part of its nominal value and, after that, to nothing, in whose hands was the bulk of it? The answer is simple. I shall give it in the exact words of that thoughtful historian from whom I have already quoted: "Before the end of the year 1795 the paper money was almost exclusively in the hands of the working classes, employees and men of small means, whose property was not large enough to invest in stores of goods or national lands. [69] Financiers and men of large means were shrewd enough to put as much of their property as possible into objects of permanent value. The working classes had no such foresight or skill or means. On them finally came the great crushing weight of the loss. After the first collapse came up the cries of the starving. Roads and bridges were neglected; many manufactures were given up in utter helplessness." To continue, in the words of the historian already cited: "None felt any confidence in the future in any respect; few dared to make a business investment for any length of time and it was accounted a folly to curtail the pleasures of the moment, to accumulate or save for so uncertain a future." [70]

This system in finance was accompanied by a system in politics no less startling, and each system tended to aggravate the other. The wild radicals, having sent to the guillotine first all the Royalists and next all the leading Republicans they could entrap, the various factions began sending each other to the same destination:—Hebertists, Dantonists, with various other factions and groups, and, finally, the Robespierrists, followed each other in rapid succession. After these declaimers and phrase-mongers had thus disappeared there came to power, in October, 1795, a new government,—mainly a survival of the more scoundrelly,—the Directory. It found the country utterly impoverished and its only resource at first was to print more paper and to issue even while wet from the press. These new issues were made at last by the two great committees, with or without warrant of law, and in greater sums than ever. Complaints were made that the array of engravers and printers at the mint could not meet the demand for assignats—that they could produce only from sixty to seventy millions per day and that the government was spending daily from eighty to ninety millions. Four thousand millions of francs were issued during one month, a little later three thousand millions, a little later four thousand millions, until there had been put forth over thirty-five thousand millions. The purchasing power of this paper having now become almost nothing, it was decreed, on the 22nd of December, 1795, that the whole amount issued should be limited to forty thousand millions, including all that had previously been put forth and that when this had been done the copper plates should be broken. Even in spite of this, additional issues were made amounting to about ten thousand millions. But on the 18th of February, 1796, at nine o'clock in the morning, in the presence of a great crowd, the machinery, plates and paper for printing assignats were brought to the Place Vendome and there, on the spot where the Napoleon Column now stands, these were solemnly broken and burned.

Shortly afterward a report by Camus was made to the Assembly that the entire amount of paper money issued in less than six years by the Revolutionary Government of France had been over forty-five thousand millions of francs—that over six thousand millions had been annulled and burned and that at the final catastrophe there were in circulation close upon forty thousand millions. It will be readily seen that it was fully time to put an end to the system, for the gold "louis" of twenty-five francs in specie had, in February, 1796, as we have seen, become worth 7,200 francs, and, at the latest quotation of all, no less than 15,000 francs in paper money—that is, one franc in gold was nominally worth 600 francs in paper.

Such were the results of allowing dreamers, schemers, phrase-mongers, declaimers and strong men subservient to these to control a government. [71]



III.

The first new expedient of the Directory was to secure a forced loan of six hundred million francs from the wealthier classes; but this was found fruitless. Ominous it was when persons compelled 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 howls of the mob against all who had anything especially to do with money resounded in every city. At last the Directory bethought themselves of another expedient. This was by no means new. It had been fully tried on our continent twice before that time: and once, since—first, in our colonial period; next, during our Confederation; lastly, by the "Southern Confederacy" and here, as elsewhere, always in vain. But experience yielded to theory—plain business sense to financial metaphysics. It was determined to issue a new paper which should be "fully secured" and "as good as gold."

Pursuant to this decision it was decreed that a new paper money "fully secured and as good as gold" be issued under the name of "mandats." In order that these new notes should be "fully secured," choice public 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 the lands to be determined by two experts, one named by the government and one by the buyer, and without the formalities and delays previously established in regard to the purchase of lands with assignats.

Perhaps the most whimsical thing in the whole situation was the fact that the government, pressed as it was by demands of all sorts, continued to issue the old assignats at the same time that it was discrediting them by issuing the new mandats. And yet in order to make the mandats "as good as gold" it was planned by forced loans and other means to reduce the quantity 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 of their nominal value; from this they speedily fell to fifteen, and soon after to five per cent, and finally, in August, 1796, six months from their first issue, to three per cent. This plan failed—just as it failed in New England in 1737; just as it failed under our own Confederation in 1781; just as it failed under the Southern Confederacy during our Civil War. [72]

To sustain this new currency the government resorted to every method that ingenuity could devise. Pamphlets suited to people of every capacity were published explaining its advantages. Never was there more skillful puffing. A pamphlet signed "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 security was better than with assignats; how they could not, by any possibility, sink in values as the assignats had done. But even before the pamphlet was dry from the press the depreciation of the mandats had refuted his entire argument. [73]

The old plan of penal measures was again pressed. Monot led off by proposing penalties against those who shall speak publicly against the mandats; Talot thought the penalties ought to be made especially severe; and finally it was enacted that any persons "who by their discourse or writing shall decry the mandats shall be condemned to a fine of not less than one 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 action of those natural laws which are alike inexorable in all countries. This attempt proved futile in France just as it had proved futile less than twenty years before in America. No enactments could stop the downward tendency of this new paper "fully secured," "as good as gold"; the laws that finally govern finance are not made in conventions or congresses. [74]

From time to time various new financial juggles were tried, some of them ingenious, most of them drastic. It was decreed that all assignats above the value of one hundred francs should cease to circulate after the beginning of June, 1796. But this only served to destroy the last vestige of, confidence in government notes of any kind. Another expedient was seen in the decree that paper money should be made to accord with a natural and immutable standard of value and that one franc in paper should thenceforth be worth ten pounds of wheat. This also failed. On July 16th another decree seemed to show that the authorities despaired of regulating 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 paid for a time with government paper at the rate of one per cent of their face value. [75] Then, less than three months later, it was decreed that the twenty-one billions of assignats still in circulation should be annulled. Finally, on September 30, 1797, as the culmination of these and various other experiments and expedients, came an order of the Directory that the national debts should be paid two-thirds in bonds which might be used in purchasing confiscated real estate, and the remaining "Consolidated Third," as it was called, was to be placed on the "Great Book" of the national debt to be paid thenceforth as the government should think best.

As to the bonds which the creditors of the nation were thus forced to take, they sank rapidly, as the assignats and mandats had done, even to three per cent of their value. As to the "Consolidated Third," that was largely paid, until the coming of Bonaparte, in paper money which sank gradually to about six per cent of its face value. Since May, 1797, both assignats and mandats had been virtually worth nothing.

So ended the reign of paper money in France. The twenty-five hundred millions of mandats went into the common heap of refuse with the previous forty-five thousand millions of assignats: the nation in general, rich and poor alike, was plunged into financial ruin from one end to the other.

On the prices charged for articles of ordinary use light is thrown by extracts from a table published in 1795, reduced to American coinage.

1790 1795 For a bushel of flour 40 cents 45 dollars For a bushel of oats 18 cents 10 dollars For a cartload of wood 4 dollars 500 dollars For a bushel of coal 7 cents 2 dollars For a pound of sugar 18 cents 12 1/2 dollars For a pound of soap 18 cents 8 dollars For a pound of candles 18 cents 8 dollars For one cabbage 8 cents 5 1/2 dollars For a pair of shoes 1 dollar 40 dollars For twenty-five eggs 24 cents 5 dollars

But these prices about the middle of 1795 were moderate compared with those which were reached before the close of that year and during the year following. Perfectly authentic examples were such as the following:

A pound of bread 9 dollars A bushel of potatoes 40 dollars A pound of candles 40 dollars A cartload of wood 250 dollars

So much for the poorer people. Typical of those esteemed wealthy may be mentioned a manufacturer of hardware who, having retired from business in 1790 with 321,000 livres, found his property in 1796 worth 14,000 francs. [76]

For this general distress arising from the development and collapse of "fiat" money in France, there was, indeed, one exception. In Paris and a few of the other great cities, men like Tallien, 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 demagogue "reformers," and a certain number of men like him, had been skillful enough to become millionaires, while their dupes, who had clamored for issues of paper money, had become paupers.

The luxury and extravagance of the currency gamblers and their families form one of the most significant features in any picture of the social condition of that period. [77]

A few years before this the leading women in French society showed a nobility of character and a simplicity in dress worthy of Roman matrons. Of these were Madame Boland and Madame Desmoulins; but now all was changed. At the head 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 could not be obtained honestly they must be had dishonestly. The more closely one examines that period, the more clearly he sees that the pictures, given by Thibaudeau and Challamel and De Goncourt are not at all exaggerated. [78]

The contrast between these gay creatures of the Directory period and the people at large was striking. Indeed much as the vast majority of the wealthy classes suffered from impoverishment, the laboring classes, salaried employees of all sorts, and people of fixed income and of small means, especially in the 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 turn even from dawn to dusk. The very rich could, by various means, especially by bribery, obtain better bread, but only at enormous cost. In May, 1796, the market price of good bread was, in paper, 80 francs (16 dollars) per pound and a little later provisions could not be bought for paper money at any price. [79]

And here it may be worth mentioning that there was another financial trouble especially vexatious. While, as we have seen, such enormous sums, rising from twenty to forty thousand millions of francs in paper, were put in circulation by the successive governments of the Revolution, enormous sums had been set afloat 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 ports in Brittany and other disaffected parts of France. One seizure by General Hoche was declared by him to exceed in nominal value ten thousand millions of francs. With the exception of a few of these issues, detection was exceedingly difficult, even for experts; for the vast majority of the people it was impossible.

Nor was this all. At various times the insurgent royalists in La Vendee and elsewhere put their presses also in operation, issuing notes 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 large bodies of the population in the insurgent districts were forced to take these. Even as late as 1799 these notes continued to appear. [80]

The financial agony was prolonged somewhat by attempts to secure funds by still another "forced loan," and other discredited measures, but when all was over 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 business demand increased, the amount of specie flowed in from the world at large to meet it and the nation gradually recovered from that long paper-money debauch.

Thibaudeau, a very thoughtful observer, tells us in his Memoirs that great fears were felt as to a want of circulating medium between the time when paper should go out and coin should come in; but that no such want was severely felt—that coin came in gradually as it was wanted. [81]

Nothing could better exemplify the saying of one of the most shrewd of modern statesmen that "There will always be money." [82]

But though there soon came a degree of prosperity—as compared with the distress during the paper-money orgy, convalescence was slow. The acute suffering from the wreck and rain brought by assignats, mandats and other paper currency in 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 the Revolution began, and demanded a "man on horseback," who established monarchy on the ruins of the Republic and thew away millions of lives for the Empire, to be added to the millions which had been sacrificed by the Revolution. [83]

Such, briefly sketched in its leading features, is the history of the most skillful, vigorous and persistent attempt ever made to substitute for natural laws in finance the ability of legislative bodies, 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 whatever circumstances, has reached similar results in kind if not in degree; all of them show the existence of financial laws as real in their operation as those which hold the planets in their courses. [84]

I have now presented this history in its chronological order—the order of events: let me, in conclusion, sum it up, briefly, in its logical order,—the order of cause and effect.

And, first, in the economic department. From the early reluctant and careful issues of paper we saw, as an immediate result, improvement and activity in business. Then arose the clamor for more paper money. At first, new issues were made with great difficulty; 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 nation, by its simple fiat, could stamp real value to any amount upon valueless objects. As a natural consequence a great debtor class grew rapidly, and this class gave its influence to depreciate more and more the currency in which its debts were to be paid. [85]

The government now began, and continued by spasms to grind out still more paper; commerce was at first stimulated by the difference in exchange; but this cause soon ceased to operate, and commerce, having been stimulated unhealthfully, wasted away.

Manufactures at first received a great impulse; but, ere long, this overproduction and overstimulus proved as fatal to them as to commerce. From time to time there was a revival of hope caused by an apparent revival 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 large, the classes living on fixed incomes and small salaries felt the pressure first, as soon as the purchasing power of their fixed incomes was reduced. Soon the great class living on wages felt it even more sadly.

Prices of the necessities of life increased: merchants were obliged to increase them, not only to cover depreciation of their merchandise, but also to cover their risk of loss from fluctuation; and, while the prices of products thus rose, wages, which had at first gone up, under 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 of supply and demand, the price of labor—the daily wages of the laboring class—went down until, at a time when prices of food, clothing and various articles of consumption were enormous, wages were nearly as low as at the time preceding the first issue of irredeemable currency.

The mercantile classes at first thought themselves exempt from the general misfortune. They were delighted at the apparent advance in the value of the goods 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, purchases became less in amount and payments less sure; a feeling of insecurity spread throughout the country; enterprise was deadened and stagnation followed.

New issues of paper were then clamored for as more drams are demanded by a drunkard. New issues only increased the evil; capitalists were all the more reluctant to embark their money on such a sea of doubt. Workmen of all sorts were more and more thrown out of employment. Issue after issue of currency came; but no relief resulted 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 thoughtful men had lost confidence. All men were waiting; stagnation became worse and worse. At last came the collapse and then a return, by a fearful shock, to a state of things which presented something like certainty of remuneration to capital and labor. Then, and not till then, came the beginning of a new era of prosperity.

Just as dependent on the law of cause and effect was the moral development. Out of the inflation of prices grew a speculating class; and, in the complete uncertainty as to the future, all business became a game of chance, and all business men, gamblers. In city centers came a quick growth of stock-jobbers and speculators; and these set a debasing fashion in business which spread to the remotest parts of the country. Instead of satisfaction with legitimate profits, 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 fashion. To feed it, there came cheatery in the nation at large and corruption among officials and persons holding trusts. While men set such fashions in private and official business, women set fashions of extravagance in dress and living that added to the incentives to corruption. Faith in moral considerations, or even in good impulses, yielded to general distrust. National honor was thought a fiction cherished only by hypocrites. Patriotism was eaten out by cynicism.

Thus was the history of France logically developed in obedience to natural laws; such has, to a greater or less degree, always been the result of irredeemable paper, created according 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, we may fairly expect, will always be the result of them until the fiat of the Almighty shall evolve laws in the universe radically different from those which at present obtain. [87]

And, finally, as to the general development of the theory and practice which all this history records: my subject has been Fiat Money in France; How it came; What it brought; and How it ended.

It came by seeking a remedy for a comparatively small evil in an evil infinitely more dangerous. To cure a disease temporary in its character, a corrosive poison was administered, which ate out the vitals of French prosperity.

It progressed according to a law in social physics which we may call the "law of accelerating issue and depreciation." It was comparatively easy to refrain from the first issue; it was exceedingly difficult to refrain from the second; to refrain from the third and those following was practically impossible.

It brought, as we have seen, commerce and manufactures, the mercantile interest, the agricultural interest, to ruin. It brought on these the same destruction which would come to a Hollander opening the dykes of the sea to irrigate his garden in a dry summer.

It ended in the complete financial, moral and political prostration of France-a prostration from which only a Napoleon could raise it.

But this history would be incomplete without a brief sequel, showing how that great genius profited by all his experience. When Bonaparte took the consulship the condition of fiscal affairs was appalling. The government was bankrupt; an immense debt was unpaid. The further collection of taxes seemed impossible; the assessments were in hopeless confusion. War was going on in the East, on the Rhine, and in Italy, and civil war, in La Vendee. All the armies had long been unpaid, and the largest loan that could for the moment be effected was 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 first great European coalition was formed against the Empire, Napoleon was hard pressed financially, and it was proposed to resort to paper money; but he wrote to his minister, "While I live I will never resort to irredeemable paper." He never did, and France, under this determination, commanded all the gold she needed. When Waterloo came, with the invasion of the Allies, with war on her own soil, with a change of dynasty, and with heavy expenses for war and indemnities, France, on a specie basis, experienced no severe financial distress.

If we glance at the financial history of France during the Franco-Prussian War and the Communist struggle, in which a far more serious pressure was brought upon French finances than our own recent Civil War put upon American 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 methods sanctioned by the world's most costly experience, rather than by yielding to dreamers, theorists, phrase-mongers, declaimers, schemers, speculators or to that sort of, "Reform" which is "the last refuge of a scoundrel." [88]

There is a lesson in all this which it behooves every thinking man to ponder.



NOTES

Note: The White Collection at the Cornell University library mentioned in many of the following notes is described here:

http://rmc.library.cornell.edu/collections/subjects/frrev.html



THE BANK OF NEW YORK, established in 1784, was the only Bank in existence in the city of New York at the time of the French experiment with fiat money.

THE BANK OF NEW YORK AND TRUST COMPANY, which celebrates its one-hundred and fiftieth anniversary in March, 1934, considers it a privilege to be able to distribute some copies of this scholarly article of the late Andrew D. White. The article emphasizes the fact that the use of fiat money in France was 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 the currency inflation and that after some slight indications of improvement in conditions, the situation went from bad to worse. In the long run, those most injured were the people whom it was most desired to help—the laborer, the wage earner and those whose incomes from previous savings were smallest.

ANDREW D. WHITE had a long and distinguished career as educator, historian, economist and diplomat; his description of the events in France that followed the experiment with fiat money is intensely interesting and well Worth the attention of every thinking person in the United States of 1933.



FOOTNOTES:

[Footnote 1: A paper read before a meeting of Senators and Members of the House of Representatives of both political parties, at Washington, April 12th, and before the Union League Club, at New York, April 13th, 1876, and now (1914) revised and extended.]

[Footnote 2: For proof that the financial situation of France at that time was by no means hopeless, see Storch, "Economie Politique," vol. iv, p. 159.]

[Footnote 3: See Moniteur, sitting of April 10, 1790.]

[Footnote 4: Ibid., sitting of April 15, 1790.]

[Footnote 5: For details of this struggle, see Buchez and Roux, "Histoire Parlementaire de la Revolution Francaise," vol. iii, pp. 364, 365, 404. For the wild utterances of Marat throughout 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 publications, see the same collection. For the effect produced by them, see Challamel, "Les Francais sous la Revolution"; also De Goncourt, "La Societe Francaise pendant la Revolution," &c.]

For the Report referred to, see Levasseur, "Histoire des classes ouvries et de l'industrie en France de 1789 a 1870," Paris, 1903, vol. i., chap. 6. Levasseur (vol. 1, p. 120), a very strong conservative in such estimates, 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." Sybel, "Gesch. der Revolutionszeit," gives it as two milliards and Briand, "La separation" &c., agrees with him. See also De Nerve, "Finances Francaises," vol. ii, pp. 236-240; also Alison, "History of Europe," vol. i.]

[Footnote 6: For striking pictures of this feeling among the younger generation of Frenchmen, see Challamel, "Sur la Revolution," p. 305. For general history of John Law's paper money, see Henri Martin, "Histoire de France"; also Blanqui, "Histoire de l'economie politique," vol. ii, pp. 65-87; also Senior on "Paper Money," sec. iii, Pt. I, also Thiers, "Histoire de Law"; also Levasseur, op. cit. Liv. i., chap. VI. Several specimens of John Law's paper currency are to be found in the White Collection in the Library of Cornell University,—some, numbered with enormous figures.]

[Footnote 7: See Buchez and Roux, "Histoire Parlementaire," vol. v, p. 321, et seq. For an argument to prove that the assignats were, after all, not so well secured as John Law's money, see Storch, "Economie Politique," vol. iv, p. 160.]

[Footnote 8: For specimens of this first issue and of nearly every other issue during the French Revolution, see the extensive collection of originals in the Cornell University Library. For a virtually complete collection of photographic copies, see Dewamin, "Cent ans de numismatique francaise," vol. i, passim.]

[Footnote 9: See "Addresse de l'Assemblee nationals sur lea emissions d'assignats monnaies," p. 5.]

[Footnote 10: Ibid., p. 10.]

[Footnote 11: For Sarot, see "Lettre de M. Sarot," Paris, April 19, 1790. As to the sermon referred to see Levasseur as above, vol. i, p. 136.]

[Footnote 12: Von Sybel, "History of the French Revolution," vol. i, p. 252; also Levasseur, as above, pp. 137 and following.]

[Footnote 13: For Mirabeau's real opinion on irredeemable paper, see his letter to Cerutti, in a leading article of the "Moniteur"; also "Memoires do Mirabeau," vol. vii, pp. 23, 24 and elsewhere. For his pungent remarks above quoted, see Levasseur, ibid., vol. i, p. 118.]

[Footnote 14: See "Moniteur," August 27, 1790.]

[Footnote 15: "Moniteur," August 28, 1790; also Levasseur, as above, pp. 139 et seq.]

[Footnote 16: "Par une seule operation, grande, simple, magnifique." See "Moniteur." The whole sounds curiously like the proposals of the "Greenbackers," regarding the American debt, some years since.]

[Footnote 17: "Moniteur," August 29, 1790.]

[Footnote 18: See Lacretelle, "18me Siecle," vol. viii, pp. 84-87; also Thiers and Mignet.]

[Footnote 19: See Hatin, Histoire de la Presse en France, vols. v and vi.]

[Footnote 20: See "Moniteur," Sept. 5, 6 and 20, 1790.]

[Footnote 21: See Levasseur, vol. i, p. 142.]

[Footnote 22: See speech in "Moniteur"; also in Appendix to Thiers' "History of the French Revolution."]

[Footnote 23: See Levassear, "Classes ouvrieres," etc., vol. i, p. 149.]

[Footnote 24: See Levasseur, pp. 151 et seq. Various examples of these "confidence bills" are to be seen in the Library of Cornell University.]

[Footnote 25: See Levasseur, vol. i, pp. 155-156.]

[Footnote 26: See Von Sybel, "History of the Revolution," vol. i, p. 265; also Levasseur, as above, vol. i, pp. 152-160.]

[Footnote 27: For Turgot's argument against "fiat money" theory, see A. D. White, "Seven Great Statesmen in the Warfare of Humanity with Unreason," article on Turgot, pp. 169, et seq.]

[Footnote 28: See De Goncourt, "Societe francaise," for other explanations; "Les Revolutions de Paris," vol. ii, p. 216; Challamel, "Les Francais sous la Revolution"; Senior, "On Some Effects of Paper Money," p. 82; Buchez and Roux, "Histoire Parlementaire," etc., vol. x, p. 216; Aulard, "Paris pendant la Revolution thermidorienne," passim, and especially "Rapport du bureau de surveillance," vol. ii, pp. 562, et seq. (Dec. 4-24, 1795.)]

[Footnote 29: For statements and illustration of the general action of this law, see Sumner, "History of American Currency," pp. 157, 158; also Jevons, on "Money," p. 80.]

[Footnote 30: See De Goncourt, "Societe Francaise," p. 214.]

[Footnote 31: See Von Sybel, History of the French Revolution, vol. 1, pp. 281, 283.]

[Footnote 32: For proofs that issues of irredeemable paper at first stimulated manufactures and commerce in Austria and afterward ruined them, see Storch's "Economie politique," 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, see Sumner's "History of American Currency." For general statement of effect of inconvertible issues on foreign exchanges see McLeod on "Banking," p. 186.]

[Footnote 33: See Louis Blanc, "Histoire de la Revolution," tome xii, p. 113.]

[Footnote 34: See "Extrait du registre des deliberations de la section de la bibliotheque," May 3, 1791, pp. 4, 5.]

[Footnote 35: Von Sybel, vol. i, p. 273.]

[Footnote 36: For general account, see Thiers' "Revolution," chap. xiv; also Lacretelle, vol. viii, p. 109; also "Memoirs of Mallet du Pan." For a good account of the intrigues between the court and Mirabeau and of the 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 bribery of Mirabeau fully revealed, see Challamel, "Musee," etc. Vol. i, p. 341, is represented as a skeleton sitting on a pile of letters, holding the French crown in one hand and a purse of gold in the other.]

[Footnote 37: Thiers, chap. ix.]

[Footnote 38: For this and other evidences of steady decline in the purchasing power of the assignats, see Caron, "Tableaux de Depreciation du papier-monnaie," Paris, 1909, p. 386.]

[Footnote 39: See especially "Discours de Fabre d'Eglantine," in "Moniteur" for August 11, 1793; also debate in "Moniteur" of September 15, 1793; also Prudhomme's "Revolutions de Paris." For arguments of much the same tenor, see vast numbers of pamphlets, newspaper articles and speeches during the "Greenback Craze,"—and the craze for unlimited coinage of silver,—in the United States.]

[Footnote 40: See Caron, "Tableaux de Depreciation," as above, p. 386.]

[Footnote 41: Von Sybel, vol. i, pp. 509, 510, 515; also Villeneuve Bargemont, "Histoire de l'Economie Politique," vol. ii, p. 213.]

[Footnote 42: As to the purchasing power of money at that time, see Arthur Young, "Travels in France during the Years 1787, 1788 and 1789." For notices of the small currency with examples of satirical verses written regarding it, see Challamel, "Les francais sous la Revolution," 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 found in the White collection of the Cornell University Library. They are very dirty and much worn, but being printed on parchment, remain perfectly legible. For issue of quarter-"sou" pieces see Levasseur, p. 180.]

[Footnote 43: See Levasseur, vol. i, p. 176.]

[Footnote 44: For Chaumette's brilliant display of fictitious reasons for the decline see Thiers, Shoberl's translation, published by Bentley, vol. iii, p. 248.]

[Footnote 45: For these fluctuations, see Caron, as above, p. 387.]

[Footnote 46: One of the Forced Loan certificates will be found in the White Collection in the Library of Cornell University.]

[Footnote 47: For details of these transactions, see Levasseur, as above, vol. i, chap. 6, pp. 181, et seq. Original specimens of these notes, bearing the portrait of Louis XVI will be found in the Cornell University Library (White Collection) and for the whole series perfectly photographed in the same collection, Dewarmin, "Cent ans de numismatique francaise," vol. i, pp. 143-165.]

[Footnote 48: For statements showing the distress and disorder that forced the Convention to establish the "Maximum" see Levasseur, vol. i, pp. 188-193.]

[Footnote 49: See Levasseur, as above, vol. i, pp. 195-225.]

[Footnote 50: See specimens of these tickets in the White Collection in the Cornell Library.]

[Footnote 51: For these condemnations to the guillotine see the officially published trials and also the lists of the condemned, in the White Collection, also the lists given daily in the "Moniteur." For the spy system, see Levasseur, vol. i, p. 194.]

[Footnote 52: See Levasseur, as above, vol. i, p. 186. For an argument to show that the Convention was led into this Draconian legislation, not by necessity, but by its despotic tendencies, see Von Sybel's "History of the French Revolution," vol. iii, pp. 11, 12. For general statements of theories underlying the "Maximum," see Thiers; for a very interesting picture, by an eye-witness, of the absurdities and miseries it caused, see Mercier, "Nouveau Paris," edition of 1800, chapter XLIV.]

[Footnote 53: For a summary of the report of the Committee, with list of articles embraced under it, and for various interesting details, see Villeneuve Bargemont, "Histoire de 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 subject, see Louis Blanc, "Histoire de la Revolution francaise," tome x, p. 144. For Louis XIVth's claim see "Memoirs of Louis XIV for the Instruction of the Dauphin."]

For a simple exposition of the way in which the exercise of this power became simply confiscation of all private property in France, see Mallet Du Pan's "Memoirs," London, 1852, vol. ii, p. 14.]

[Footnote 54: See Du Pont's arguments, as given by Levasseur.]

[Footnote 55: Louis Blanc calls attention to this very fact in showing the superiority of the French assignats to the old American Continental currency, See his "Histoire de la Revolution francaise," tome xii, p. 98.]

[Footnote 56: See Sumner, as above, p. 220.]

[Footnote 57: See Levasseur, as above, vol. i, p. 178.]

[Footnote 58: See Cambon's "Report," Aug. 15, 1793, pp. 49-60; also, "Decree of Aug. 24, 1793," sec. 31, chapters XCVI-CIII. Also, "Tableaux de la depreciation de papier monnaie dans le department de la Seine."]

[Footnote 59: For the example of Metz and other authorities, see Levasseur, as above, vol. i, p. 180.]

[Footnote 60: See Von Sybel, vol. iii, p. 173.]

[Footnote 61: See Thiers; also, for curious details of measures taken to compel farmers and merchants, see Senior, Lectures on "Results of Paper Money," pp. 86, 87.]

[Footnote 62: See Von Sybel, vol. iv, p. 231.]

[Footnote 63: See Von Sybel, vol. iv, p. 330; also tables of depreciation in "Moniteur"; also official reports in the White Collection; also Caron's "Tables," etc.]

[Footnote 64: For a lifelike sketch of the way in which these exchanges of assignats for valuable property went on at periods of the rapid depreciation of paper, see Challamel, "Les francais sous la Revolution," p. 309; also Say, "Economic Politique."]

[Footnote 65: For a very complete table of the depreciation from day to day, see "Supplement to the Moniteur" of October 2, 1797; also Caron, as above. For the market 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 Collection. For a table showing the steady rise of the franc in gold during a single week, from 251 to 280 francs, see Dewarmin, as above, vol. i, p. 136.]

[Footnote 66: See "Memoires de Thibaudeau," vol. ii, p. 26, also Mercier, "Lo Nouveau Paris," vol. ii, p. 90; for curious example of the scales of depreciation see the White Collection. See also extended table of comparative values in 1790 and 1795. See Levasseur, as above, vol. i, pp. 223-4.]

[Footnote 67: For a striking similar case in our own country, see Sumner, "History of American Currency," p. 47.]

[Footnote 68: See Villeneuve Bargemont, "Histoire de l'economie politique," vol. ii, p. 229.]

[Footnote 69: See Von Sybel, vol. iv, pp. 337, 338. See also for confirmation Challamel, "Histoire Musee," vol. ii, p. 179. For a thoughtful statement of the reasons why such paper was not invested in lands by men of moderate means, and workingmen, see Mill, "Political Economy," vol. ii, pp. 81, 82.]

[Footnote 70: See Von Sybel, vol. iv, p. 222.]

[Footnote 71: See especially Levasseur, "Histoire des classes ouvrieres," etc. vol. i, pp. 219, 230 and elsewhere; also De Nervo, "Finance francaise," p. 280; also Stourm, as already cited. The exact amount of assignats in circulation at the final suppression is given by Dowarmin, (vol. i, p. 189), as 39,999,945,428 livres or francs.]

[Footnote 72: For details of the mandat system very thoroughly given, see Thiers' "History of the French Revolution," Bentley's edition, vol. iv, pp. 410-412. For the issue of assignats 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 1737, see Summer, pp. 27-31; for their failure in 1781, see Morse, "Life of Alexander Hamilton," vol. i, pp. 86, 87. For similar failure in Austria, see Summer, p. 314.]

[Footnote 73: See Marchant, "Lettre aux gens de bonne foi."]

[Footnote 74: See Summer, p. 44; also De Nervo, "Finances francaises," p. 282.]

[Footnote 75: See De Nervo, "Finances francaises," p. 282; also Levasseur, vol. i, p. 236 et seq.]

[Footnote 76: See Table from "Gazette de France" and extracts from other sources in Levasseur, vol. i, pp. 223-4.]

[Footnote 77: Among the many striking accounts of the debasing effects of "inflation" upon France under the Directory perhaps the best is that of Lacretelle, vol. xiii, 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 jumble of families reduced to beggary with families lifted into sudden wealth and for the mass of folly and misery thus mingled, see Levassour, vol. i, p. 237.]

[Footnote 78: For Madame Tallien and luxury of the stock-gambler classes, see Challamel, "Les francais sous la Revolution," pp. 30, 33; also De Goncourt, "Les francais sous le Directoire." Regarding the outburst of vice in Paris and the demoralization of the police, see Levasseur, as above.]

[Footnote 79: See Levasseur, Vol. i, p. 237, et seq.]

[Footnote 80: For specimens of counterfeit assignats, see the White Collection in the Cornell University Library, but for the great series of various issues of them in fac-simile, also for detective warnings and attempted descriptions 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 photograph of probably the last of the Royalist notes ever issued, bearing the words "Pro Deo, pro Rege, pro Patria" and "Armee Catholique et Royale" with the date 1799, and for the sum of 100 livres, see Dewarmin, vol. i, p. 204.]

[Footnote 81: For similar expectation of a "shock," which did not occur, at the resumption of specie payments in Massachusetts, see Sumner, "History of American Currency," p. 34.]

[Footnote 82: See Thiers.]

[Footnote 83: See Levasseur, vol. i, p. 246.]

[Footnote 84: For examples of similar effects in Russia, Austria and Denmark, see Storch, "Economie Politique," vol. iv; for similar effects in the United States, see Gouge, "Paper Money 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, "History of England," chap. xxi; and for curious exhibition of the same causes producing same results in ancient Greece, see a curious quotation by Macaulay in same chapter.]

[Footnote 85: For parallel cases in the early history of our own country, see Sumner, p. 21, and elsewhere.]

[Footnote 86: For a review of some of these attempts, with eloquent statement of their evil results, see "Memoires de Durand de Maillane," pp. 166-169.]

[Footnote 87: For similar effect of inflated currency in enervating and undermining trade, husbandry, manufactures and morals in our own country, see Daniel Webster, cited in Sumner, pp. 45-50. For similar effects in other countries, see Senior, Storch, Macaulay and others already cited.]

[Footnote 88: For facts regarding French finance under Napoleon I am indebted to Hon. David A. Wells. For more recent triumphs of financial commonsense in France, see Bonnet's articles, translated by the late George Walker, Esq. For general subject, see Levasseur.]

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