FIAT MONEY INFLATION IN FRANCE

How It Came, What It Brought, and How It Ended

by Andrew Dickson White, LL. D. , Ph. D. , D. C. L. 

Late President and Professor of History at Cornell University; SometimeUnited States Minister to Russia and Ambassador to Germany; Author of "AHistory of the Warfare of Science with Theology, " etc. 

INTRODUCTION

As far back as just before our Civil War I made, in France andelsewhere, a large collection of documents which had appeared during theFrench Revolution, including newspapers, reports, speeches, pamphlets, illustrative material of every sort, and, especially, specimens ofnearly all the Revolutionary issues of paper money, --from notes of tenthousand _livres_ to those of one _sou_. 

Upon this material, mainly, was based a course of lectures then givento my students, first at the University of Michigan and later at CornellUniversity, and among these lectures, one on "Paper Money Inflation inFrance. "

This was given simply because it showed one important line of facts inthat great struggle; and I recall, as if it were yesterday, my feelingof regret at being obliged to bestow so much care and labor upon asubject to all appearance so utterly devoid of practical value. Iam sure that it never occurred, either to my Michigan students or tomyself, that it could ever have any bearing on our own country. Itcertainly never entered into our minds that any such folly as thatexhibited in those French documents of the eighteenth century could everfind supporters in the United States of the nineteenth. 

Some years later, when there began to be demands for large issues ofpaper money in the United States, I wrought some of the facts thuscollected into a speech in the Senate of the State of New York, showingthe need of especial care in such dealings with financial necessities. 

In 1876, during the "greenback craze, " General Garfield and Mr. S. B. Crittenden, both members of the House of Representatives at that time, asked me to read a paper on the same general subject before an audienceof Senators and Representatives of both parties in Washington. This Idid, and also gave it later before an assemblage of men of business atthe Union League Club in New York. 

Various editions of the paper were afterward published, among them, twoor three for campaign purposes, in the hope that they might be of usein showing to what folly, cruelty, wrong and rain the passion for "fiatmoney" may lead. 

Other editions were issued at a later period, in view of the principleinvolved in the proposed unlimited coinage of silver in the UnitedStates, which was, at bottom, the idea which led to that fearful wreckof public and private prosperity in France. 

For these editions there was an added reason in the fact that theutterances of sundry politicians at that time pointed clearly to issuesof paper money practically unlimited. These men were logical enoughto see that it would be inconsistent to stop at the unlimited issueof silver dollars which cost really something when they could issueunlimited paper dollars which virtually cost nothing. 

In thus exhibiting facts which Bishop Butler would have recognized asconfirming his theory of "The Possible Insanity of States, " it is butjust to acknowledge that the French proposal was vastly more sane thanthat made in our own country. Those French issues of paper rested notmerely "on the will of a free people, " but on one-third of the entirelanded property of France; on the very choicest of real property in cityand country--the confiscated estates of the Church and of the fugitivearistocracy--and on the power to use the paper thus issued in purchasingthis real property at very low prices. 

I have taken all pains to be exact, revising the whole paper in thelight of the most recent publications and giving my authority for everyimportant statement, and now leave the whole matter with my readers. 

At the request of a Canadian friend, who has expressed a strong wishthat this work be brought down to date, I have again restudied thesubject in the light of various works which have appeared sincemy earlier research, --especially Levasseur's "Histoire des classesouvrières et de l'industrie en France, "--one of the really great booksof the twentieth century;--Dewarmin's superb "Cent Ans de numismatiqueFrançaise" and sundry special treatises. The result has been thatlarge additions have been made regarding some important topics, andthat various other parts of my earlier work have been made more clear bybetter arrangement and supplementary information. 

ANDREW D. WHITE. Cornell University, September, 1912. 

FOREWORD BY MR. JOHN MACKAY

I am greatly indebted to the generosity of Mr. Andrew D. White, thedistinguished American scholar, author and diplomatist, for permissionto print and to circulate privately a small edition of his exceedinglyvaluable account of the great currency-making experiment of the FrenchRevolutionary Government. The work has been revised and considerablyenlarged by Mr. White for the purpose of the present issue. 

The story of "Fiat Money Inflation in France" is one of great interestto legislators, to economic students, and to all business and thinkingmen. It records the most gigantic attempt ever made in the history ofthe world by a government to create an inconvertible paper currency, andto maintain its circulation at various levels of value. It also recordswhat is perhaps the greatest of all governmental efforts--with thepossible exception of Diocletian's--to enact and enforce a legal limitof commodity prices. Every fetter that could hinder the will or thwartthe wisdom of democracy had been shattered, and in consequence everydevice and expedient that untrammelled power and unrepressed optimismcould conceive were brought to bear. But the attempts failed. They leftbehind them a legacy of moral and material desolation and woe, fromwhich one of the most intellectual and spirited races of Europe hassuffered for a century and a quarter, and will continue to suffer untilthe end of time. There are limitations to the powers of governments andof peoples that inhere in the constitution of things, and that neitherdespotisms nor democracies can overcome. 

Legislatures are as powerless to abrogate moral and economic laws asthey are to abrogate physical laws. They cannot convert wrong into rightnor divorce effect from cause, either by parliamentary majorities, orby unity of supporting public opinion. The penalties of suchlegislative folly will always be exacted by inexorable time. While thesepropositions may be regarded as mere commonplaces, and while they areacknowledged in a general way, they are in effect denied by many ofthe legislative experiments and the tendencies of public opinion of thepresent day. The story, therefore, of the colossal folly of France inthe closing part Of the eighteenth century and its terrible fruits, isfull of instruction for all men who think upon the problems of our owntime. 

From among an almost infinite variety, there are four great andfundamental facts that clearly emerge, namely, --

(1) Notwithstanding the fact that the paper currency issued was thedirect obligation of the State, that much of it was interest bearing, and that all of it was secured upon the finest real estate in France, and that penalties in the way of fines, imprisonments and death wereenacted from time to time to maintain its circulation at fixed values, there was a steady depreciation in value until it reached zero point andculminated in repudiation. The aggregate of the issues amounted to noless than the enormous and unthinkable sum of $9, 500, 000, 000, and inthe middle of 1797 when public repudiation took place, there was noless than $4, 200, 000, 000 in face value of _assignats_ and _mandats_outstanding; the loss, as always, falling mostly upon the poor and theignorant. 

(2) In the attempt to maintain fixed values for the paper currency theGovernment became involved in an equally futile attempt to maintain atariff of legal prices for commodities. Here again penalties of fines, of imprisonments and of death were powerless to accomplish the end inview. 

(3) An wholesale demoralisation of society took place under whichthrift, integrity, humanity, and every principle of morality were throwninto the welter of seething chaos and cruelty. 

(4) The real estate upon which the paper currency was securedrepresented confiscations by the State of the lands of the Church andof the Emigrant Noblemen. These lands were appraised, according to Mr. White's narrative and other authorities, at $1, 000, 000, 000. Here wasa straight addition to the State's resources of $1, 000, 000, 000. It isominously significant that within one hundred years under the "Peace ofFrankfort" signed on the 10th May, 1871, the French nation agreed to paya war indemnity to victorious Germany of exactly the same sum, namely, $1, 000, 000, 000 in addition to the surrender of the province of Alsaceand a considerable part of Lorraine. The great addition to the nationalwealth, therefore, effected by the immoral confiscation of the lands inquestion disappeared with compound territorial interest added under thevisitation of relentless retribution. 

Public opinion in our own country is so far sound on the questionof currency, but signs are not lacking in some lay quarters ofan inclination to sanction dangerous experiments. The doctrine ofgovernmental regulation of prices, has, however, made its appearance inembryo. Class dissatisfaction is also on the increase. The confiscationof property rights under legal forms and processes is apt to be condonedwhen directed against unpopular interests and when limited to amountsthat do not revolt the conscience. The wild and terrible expressiongiven to these insidious principles in the havoc of the Revolutionshould be remembered by all. Nor should the fact be overlooked that, asMr. White points out on Page 6, the National Assembly of France whichoriginated and supported these measures contained in its membership theablest Frenchmen of the day. 

JOHN MACKAY. Toronto General Trusts Building, Toronto, 31st March, 1914. 

FIAT MONEY INFLATION IN FRANCE

How It Came, What It Brought, and How It Ended [1]

I. 

Early in the year 1789 the French nation found itself in deep financialembarrassment: there was a heavy debt and a serious deficit. 

The vast reforms of that period, though a lasting blessing politically, were a temporary evil financially. There was a general want ofconfidence in business circles; capital had shown its proverbialtimidity by retiring out of sight as far as possible; throughout theland was stagnation. 

Statesmanlike measures, careful watching and wise management would, doubtless, have ere long led to a return of confidence, a reappearanceof money and a resumption of business; but these involved patienceand self-denial, and, thus far in human history, these are the rarestproducts of political wisdom. Few nations have ever been able toexercise these virtues; and France was not then one of these few. [2]

There was a general search for some short road to prosperity: ere longthe idea was set afloat that the great want of the country was more ofthe circulating medium; and this was speedily followed by calls for anissue of paper money. The Minister of Finance at this period was Necker. In financial ability he was acknowledged as among the great bankers ofEurope, but his was something more than financial ability: he had adeep feeling of patriotism and a high sense of personal honor. Thedifficulties in his way were great, but he steadily endeavored tokeep France faithful to those principles in monetary affairs which thegeneral experience of modern times had found the only path to nationalsafety. As difficulties arose the National Assembly drew away from him, and soon came among the members renewed suggestions of paper money:orators in public meetings, at the clubs and in the Assembly, proclaimedit a panacea--a way of "securing resources without paying interest. "Journalists caught it up and displayed its beauties, among these men, Marat, who, in his newspaper, "The Friend of the People, " also joinedthe cries against Necker, picturing him--a man of sterling honesty, whogave up health and fortune for the sake of France--as a wretch seekingonly to enrich himself from the public purse. 

Against this tendency toward the issue of irredeemable paper Neckercontended as best he might. He knew well to what it always had led, even when surrounded by the most skillful guarantees. Among those whostruggled to support ideas similar to his was Bergasse, a deputy fromLyons, whose pamphlets, then and later, against such issues exerted awider influence, perhaps, than any others: parts of them seem fairlyinspired. Any one to-day reading his prophecies of the evils sure tofollow such a currency would certainly ascribe to him a miraculousforesight, were it not so clear that his prophetic power was due simplyto a knowledge of natural laws revealed by history. But this current infavor of paper money became so strong that an effort was made to breastit by a compromise: and during the last months of 1789 and the firstmonths of 1790 came discussions in the National Assembly looking toissues of notes based upon the landed property of the Church, --which wasto be confiscated for that purpose. But care was to be taken; the issuewas to be largely in the shape of notes of 1, 000, 300 and 200 _livres_, too large to be used as ordinary currency, but of convenient size tobe used in purchasing the Church lands; besides this, they were to bearinterest and this would tempt holders to hoard them. The Assembly thusheld back from issuing smaller obligations. 

Remembrances of the ruin which had come from the great issues of smallercurrency at an earlier day were still vivid. Yet the pressure towarda popular currency for universal use grew stronger and stronger. Thefinance committee of the Assembly reported that "the people demand a newcirculating medium"; that "the circulation of paper money is the best ofoperations"; that "it is the most free because it reposes on the willof the people"; that "it will bind the interest of the citizens to thepublic good. "

The report appealed to the patriotism of the French people with thefollowing exhortation: "Let us show to Europe that we understand ourown resources; let us immediately take the broad road to our liberationinstead of dragging ourselves along the tortuous and obscure paths offragmentary loans. " It concluded by recommending an issue of paper moneycarefully guarded, to the full amount of four hundred million _livres_, and the argument was pursued until the objection to smaller notes fadedfrom view. Typical in the debate on the whole subject, in its variousphases, were the declarations of M. Matrineau. He was loud and long forpaper money, his only fear being that the Committee had not authorizedenough of it; he declared that business was stagnant, and that the solecause was a want of more of the circulating medium; that paper moneyought to be made a legal tender; that the Assembly should rise aboveprejudices which the failures of John Law's paper money had caused, several decades before. Like every supporter of irredeemable paper moneythen or since, he seemed to think that the laws of Nature had changedsince previous disastrous issues. He said: "Paper money undera despotism is dangerous; it favors corruption; but in a nationconstitutionally governed, which itself takes care in the emission ofits notes, which determines their number and use, that danger no longerexists. " He insisted that John Law's notes at first restored prosperity, but that the wretchedness and ruin they caused resulted from theiroverissue, and that such an overissue is possible only under adespotism. [3]

M. De la Rochefoucauld gave his opinion that "the _assignats_ will drawspecie out of the coffers where it is now hoarded. [4]

On the other hand Cazalès and Maury showed that the result could onlybe disastrous. Never, perhaps, did a political prophecy meet with moreexact fulfillment in every line than the terrible picture drawn in oneof Cazalès' speeches in this debate. Still the current ran stronger andstronger; Petion made a brilliant oration in favor of the report, andNecker's influence and experience were gradually worn away. 

Mingled with the financial argument was a strong political plea. TheNational Assembly had determined to confiscate the vast real propertyof the French Church, --the pious accumulations of fifteen hundredyears. There were princely estates in the country, bishops' palaces andconventual buildings in the towns; these formed between one-fourth andone-third of the entire real property of France, and amounted in valueto at least two thousand million _livres_. By a few sweeping strokesall this became the property of the nation. Never, apparently, did agovernment secure a more solid basis for a great financial future. [5]

There were two special reasons why French statesmen desired speedily tosell these lands. First, a financial reason, --to obtain money torelieve the government. Secondly, a political reason, --to get this landdistributed among the thrifty middle-classes, and so commit them to theRevolution and to the government which gave their title. 

It was urged, then, that the issue of four hundred millions of paper, (not in the shape of interest-bearing bonds, as had at first beenproposed, but in notes small as well as large), would give the treasurysomething to pay out immediately, and relieve the national necessities;that, having been put into circulation, this paper money would stimulatebusiness; that it would give to all capitalists, large or small, themeans for buying from the nation the ecclesiastical real estate, andthat from the proceeds of this real estate the nation would pay itsdebts and also obtain new funds for new necessities: never was theorymore seductive both to financiers and statesmen. 

It would be a great mistake to suppose that the statesmen of France, orthe French people, were ignorant of the dangers in issuing irredeemablepaper money. No matter how skillfully the bright side of such a currencywas exhibited, all thoughtful men in France remembered its dark side. They knew too well, from that ruinous experience, seventy years before, in John Law's time, the difficulties and dangers of a currency not wellbased and controlled. They had then learned how easy it is to issue it;how difficult it is to check its overissue; how seductively it leads tothe absorption of the means of the workingmen and men of small fortunes;how heavily it falls on all those living on fixed incomes, salaries orwages; how securely it creates on the ruins of the prosperity of allmen of meagre means a class of debauched speculators, the mostinjurious class that a nation can harbor, --more injurious, indeed, thanprofessional criminals whom the law recognizes and can throttle; howit stimulates overproduction at first and leaves every industry flaccidafterward; how it breaks down thrift and develops political and socialimmorality. All this France had been thoroughly taught by experience. Many then living had felt the result of such an experiment--the issuesof paper money under John Law, a man who to this day is acknowledgedone of the most ingenious financiers the world has ever known; and therewere then sitting in the National Assembly of France many who owed thepoverty of their families to those issues of paper. Hardly a man in thecountry who had not heard those who issued it cursed as the authors ofthe most frightful catastrophe France had then experienced. [6]

It was no mere attempt at theatrical display, but a natural impulse, which led a thoughtful statesman, during the debate, to hold up a pieceof that old paper money and to declare that it was stained with theblood and tears of their fathers. 

And it would also be a mistake to suppose that the National Assembly, which discussed this matter, was composed of mere wild revolutionists;no inference could be more wide of the fact. Whatever may have been thecharacter of the men who legislated for France afterward, no thoughtfulstudent of history can deny, despite all the arguments and sneersof reactionary statesmen and historians, that few more keen-sightedlegislative bodies have ever met than this first French ConstitutionalAssembly. In it were such men as Sieyès, Bailly, Necker, Mirabeau, Talleyrand, DuPont de Nemours and a multitude of others who, in varioussciences and in the political world, had already shown and were destinedafterward to show themselves among the strongest and shrewdest men thatEurope has yet seen. 

But the current toward paper money had become irresistible. It wasconstantly urged, and with a great show of force, that if any nationcould safely issue it, France was now that nation; that she was fullywarned by her severe experience under John Law; that she was now aconstitutional government, controlled by an enlightened, patrioticpeople, --not, as in the days of the former issues of paper money, anabsolute monarchy controlled by politicians and adventurers; thatshe was able to secure every _livre_ of her paper money by a virtualmortgage on a landed domain vastly greater in value than the entireissue; that, with men like Bailly, Mirabeau and Necker at her head, shecould not commit the financial mistakes and crimes from which France hadsuffered under John Law, the Regent Duke of Orleans and Cardinal Dubois. 

Oratory prevailed over science and experience. In April, 1790, came thefinal decree to issue four hundred millions of _livres_ in paper money, based upon confiscated property of the Church for its security. Thedeliberations on this first decree and on the bill carrying it intoeffect were most interesting; prominent in the debate being Necker, DuPont de Nemours, Maury, Cazalès, Petion, Bailly and many others hardlyinferior. The discussions were certainly very able; no person can readthem at length in the "Moniteur, " nor even in the summaries of theparliamentary history, without feeling that various modern historianshave done wretched injustice to those men who were then endeavoring tostand between France and ruin. 

This sum--four hundred millions, so vast in those days, was issued in_assignats_, which were notes secured by a pledge of productivereal estate and bearing interest to the holder at three per cent. Noirredeemable currency has ever claimed a more scientific and practicalguarantee for its goodness and for its proper action on public finances. On the one hand, it had what the world recognized as a most practicalsecurity, --a mortgage an productive real estate of vastly greater valuethan the issue. On the other hand, as the notes bore interest, thereseemed cogent reason for their being withdrawn from circulation wheneverthey became redundant. [7]

As speedily as possible the notes were put into circulation. Unlikethose issued in John Law's time, they were engraved in the best styleof the art. To stimulate loyalty, the portrait of the king was placedin the center; to arouse public spirit, patriotic legends and emblemssurrounded it; to stimulate public cupidity, the amount of interestwhich the note would yield each day to the holder was printed in themargin; and the whole was duly garnished with stamps and signatures toshow that it was carefully registered and controlled. [8]

To crown its work the National Assembly, to explain the advantagesof this new currency, issued an address to the French people. In thisaddress it spoke of the nation as "delivered by this grand means fromall uncertainty and from all ruinous results of the credit system. " Itforetold that this issue "would bring back into the public treasury, into commerce and into all branches of industry strength, abundance andprosperity. " [9]

Some of the arguments in this address are worth recalling, and, amongthem, the following:--"Paper money is without inherent value unlessit represents some special property. Without representing some specialproperty it is inadmissible in trade to compete with a metalliccurrency, which has a value real and independent of the public action;therefore it is that the paper money which has only the public authorityas its basis has always caused ruin where it has been established; thatis the reason why the bank notes of 1720, issued by John Law, afterhaving caused terrible evils, have left only frightful memories. Therefore it is that the National Assembly has not wished to exposeyou to this danger, but has given this new paper money not only a valuederived from the national authority but a value real and immutable, avalue which permits it to sustain advantageously a competition with theprecious metals themselves. " [10]

But the final declaration was, perhaps, the most interesting. It was asfollows:--

"These _assignats_, bearing interest as they do, will soon be consideredbetter than the coin now hoarded, and will bring it out again intocirculation. " The king was also induced to issue a proclamationrecommending that his people receive this new money without objection. 

All this caused great joy. Among the various utterances of this feelingwas the letter of M. Sarot, directed to the editor of the Journal of theNational Assembly, and scattered through France. M. Sarot is hardly ableto contain himself as he anticipates the prosperity and glory that thisissue of paper is to bring to his country. One thing only vexes him, andthat is the pamphlet of M. Bergasse against the _assignats_; thereforeit is after a long series of arguments and protestations, in order togive a final proof of his confidence in the paper money and his entireskepticism as to the evils predicted by Bergasse and others, M. Sarotsolemnly lays his house, garden and furniture upon the altar of hiscountry and offers to sell them for paper money alone. 

There were, indeed, some gainsayers. These especially appeared among theclergy, who, naturally, abhorred the confiscation of Church property. Various ecclesiastics made speeches, some of them full of pithy andweighty arguments, against the proposed issue of paper, and there ispreserved a sermon from one priest threatening all persons handling thenew money with eternal damnation. But the great majority of the Frenchpeople, who had suffered ecclesiastical oppression so long, regardedthese utterances as the wriggling of a fish on the hook, and enjoyed thesport all the better. [11]

The first result of this issue was apparently all that the most sanguinecould desire: the treasury was at once greatly relieved; a portion ofthe public debt was paid; creditors were encouraged; credit revived;ordinary expenses were met, and, a considerable part of this papermoney having thus been passed from the government into the hands ofthe people, trade increased and all difficulties seemed to vanish. Theanxieties of Necker, the prophecies of Maury and Cazalès seemed provenutterly futile. And, indeed, it is quite possible that, if the nationalauthorities had stopped with this issue, few of the financial evilswhich afterwards arose would have been severely felt; the four hundredmillions of paper money then issued would have simply discharged thefunction of a similar amount of specie. But soon there came anotherresult: times grew less easy; by the end of September, within fivemonths after the issue of the four hundred millions in _assignats_, thegovernment had spent them and was again in distress. [12]

The old remedy immediately and naturally recurred to the minds ofmen. Throughout the country began a cry for another issue of paper;thoughtful men then began to recall what their fathers had told themabout the seductive path of paper-money issues in John Law's time, andto remember the prophecies that they themselves had heard in the debateon the first issue of _assignats_ less than six months before. 

At that time the opponents of paper had prophesied that, once on thedownward path of inflation, the nation could not be restrained and thatmore issues would follow. The supporters of the first issue had assertedthat this was a calumny; that the people were now in control and thatthey could and would check these issues whenever they desired. 

The condition of opinion in the Assembly was, therefore, chaotic: a fewschemers and dreamers were loud and outspoken for paper money; manyof the more shallow and easy-going were inclined to yield; the morethoughtful endeavored to breast the current. 

One man there was who could have withstood the pressure: Mirabeau. Hewas the popular idol, --the great orator of the Assembly and much morethan a great orator, --he had carried the nation through some of itsworst dangers by a boldness almost godlike; in the various conflicts hehad shown not only oratorical boldness, but amazing foresight. As to hisreal opinion on an irredeemable currency there can be no doubt. It wasthe opinion which all true statesmen have held, before his time andsince, --in his own country, in England, in America, in every moderncivilized nation. In his letter to Cerutti, written in January, 1789, hardly six months before, he had spoken of paper money as "A nursery oftyranny, corruption and delusion; a veritable debauch of authority indelirium. " In one of his early speeches in the National Assembly he hadcalled such money, when Anson covertly suggested its issue, "a loanto an armed robber, " and said of it: "that infamous word, paper money, ought to be banished from our language. " In his private letters writtenat this very time, which were revealed at a later period, he showed thathe was fully aware of the dangers of inflation. But he yielded to thepressure: partly because he thought it important to sell the governmentlands rapidly to the people, and so develop speedily a large class ofsmall landholders pledged to stand by the government which gave themtheir titles; partly, doubtless, from a love of immediate rather thanof remote applause; and, generally, in a vague hope that the severe, inexorable laws of finance which had brought heavy punishments upongovernments emitting an irredeemable currency in other lands, at othertimes, might in some way at this time, be warded off from France. [13]

The question was brought up by Montesquieu's report on the 27thof August, 1790. This report favored, with evident reluctance, anadditional issue of paper. It went on to declare that the original issueof four hundred millions, though opposed at the beginning, had provedsuccessful; that _assignats_ were economical, though they had dangers;and, as a climax, came the declaration: "We must save the country. " [14]

Upon this report Mirabeau then made one of his most powerful speeches. He confessed that he had at first feared the issue of _assignats_, butthat he now dared urge it; that experience had shown the issue ofpaper money most serviceable; that the report proved the first issueof _assignats_ a success; that public affairs had come out of distress;that ruin had been averted and credit established. He then argued thatthere was a difference between paper money of the recent issue andthat from which the nation had suffered so much in John Law's time; hedeclared that the French nation had now become enlightened and he added, "Deceptive subtleties can no longer mislead patriots and men of sense inthis matter. " He then went on to say: "We must accomplish that whichwe have begun, " and declared that there must be one more large issueof paper, guaranteed by the national lands and by the good faith of theFrench nation. To show how practical the system was he insisted thatjust as soon as paper money should become too abundant it would beabsorbed in rapid purchases of national lands; and he made a verystriking comparison between this self-adjusting, self-converting systemand the rains descending in showers upon the earth, then in swellingrivers discharged into the sea, then drawn up in vapor and finallyscattered over the earth again in rapidly fertilizing showers. Hepredicted that the members would be surprised at the astonishing successof this paper money and that there would be none too much of it. 

His theory grew by what it fed upon, --as the paper-money theory hasgenerally done. Toward the close, in a burst of eloquence, he suggestedthat _assignats_ be created to an amount sufficient to cover thenational debt, and that all the national lands be exposed for saleimmediately, predicting that thus prosperity would return to the nationand that an classes would find this additional issue of paper money ablessing. [15]

This speech was frequently interrupted by applause; a unanimous voteordered it printed, and copies were spread throughout France. Theimpulse given by it permeated all subsequent discussion; Gouy aroseand proposed to liquidate the national debt of twenty-four hundredmillions, --to use his own words--"by one single operation, grand, simple, magnificent. " [16] This "operation" was to be the emission oftwenty-four hundred millions in legal tender notes, and a law thatspecie should not be accepted in purchasing national lands. His demagogybloomed forth magnificently. He advocated an appeal to the people, who, to use his flattering expression, "ought alone to give the law in amatter so interesting. " The newspapers of the period, in reporting hisspeech, noted it with the very significant remark, "This discourse wasloudly applauded. "

To him replied Brillat-Savarin. He called attention to the depreciationof _assignats_ already felt. He tried to make the Assembly see thatnatural laws work as inexorably in France as elsewhere; he predictedthat if this new issue were made there would come a depreciation ofthirty per cent. Singular, that the man who so fearlessly stood againstthis tide of unreason has left to the world simply a reputation asthe most brilliant cook that ever existed! He was followed by the AbbeGoutes, who declared, --what seems grotesque to those who have readthe history of an irredeemable paper currency in any country--thatnew issues of paper money "will supply a circulating medium which willprotect public morals from corruption. " [17]

Into this debate was brought a report by Necker. He was not, indeed, the great statesman whom France especially needed at this time, of alltimes. He did not recognize the fact that the nation was entering agreat revolution, but he could and did see that, come what might, there were simple principles of finance which must be adhered to. Mostearnestly, therefore, he endeavored to dissuade the Assembly fromthe proposed issue; suggesting that other means could be found foraccomplishing the result, and he predicted terrible evils. But thecurrent was running too fast. The only result was that Necker wasspurned as a man of the past; he sent in his resignation and leftFrance forever. [18] The paper-money demagogues shouted for joy at hisdeparture; their chorus rang through the journalism of the time. Nowords could express their contempt for a man who was unable to see theadvantages of filling the treasury with the issues of a printing press. Marat, Hébert, Camille Desmoulins and the whole mass of demagogues sosoon to follow them to the guillotine were especially jubilant. [19]

Continuing the debate, Rewbell attacked Necker, saying that the_assignats_ were not at par because there were not yet enough of them;he insisted that payments for public lands be received in _assignats_alone; and suggested that the church bells of the kingdom be melted downinto small money. Le Brun attacked the whole scheme in the Assembly, ashe had done in the Committee, declaring that the proposal, insteadof relieving the nation, would wreck it. The papers of the time verysignificantly say that at this there arose many murmurs. Chabroud cameto the rescue. He said that the issue of _assignats_ would relieve thedistress of the people and he presented very neatly the new theory ofpaper money and its basis in the following words: "The earth is thesource of value; you cannot distribute the earth in a circulating value, but this paper becomes representative of that value and it is evidentthat the creditors of the nation will not be injured by taking it. " Onthe other hand, appeared in the leading paper, the "Moniteur, " a verythoughtful article against paper money, which sums up all by saying, "It is, then, evident that all paper which cannot, at the will of thebearer, be converted into specie cannot discharge the functions ofmoney. " This article goes on to cite Mirabeau's former opinion in hisletter to Cerutti, published in 1789, --the famous opinion of paper moneyas "a nursery of tyranny, corruption and delusion; a veritable debauchof authority in delirium. " Lablache, in the Assembly, quoted a sayingthat "paper money is the emetic of great states. " [20]

Boutidoux, resorting to phrasemaking, called the _assignats_ _"un papierterre, "_ or "land converted into paper. " Boislandry answered vigorouslyand foretold evil results. Pamphlets continued to be issued, --amongthem, one so pungent that it was brought into the Assembly and readthere, --the truth which it presented with great clearness being simplythat doubling the quantity of money or substitutes for money in a nationsimply increases prices, disturbs values, alarms capital, diminisheslegitimate enterprise, and so decreases the demand both for productsand for labor; that the only persons to be helped by it are the richwho have large debts to pay. This pamphlet was signed "A Friend of thePeople, " and was received with great applause by the thoughtful minorityin the Assembly. Du Pont de Nemours, who had stood by Necker in thedebate on the first issue of _assignats_, arose, avowed the pamphlet tobe his, and said sturdily that he had always voted against the emissionof irredeemable paper and always would. [21]

Far more important than any other argument against inflation was thespeech of Talleyrand. He had been among the boldest and most radicalFrench statesmen. He it was, --a former bishop, --who, more than anyother, had carried the extreme measure of taking into the possession ofthe nation the great landed estates of the Church, and he had supportedthe first issue of four hundred millions. But he now adopted a judicialtone--attempted to show to the Assembly the very simple truth that theeffect of a second issue of _assignats_ may be different from that ofthe first; that the first was evidently needed; that the second may beas injurious as the first was useful. He exhibited various weak pointsin the inflation fallacies and presented forcibly the trite truth thatno laws and no decrees can keep large issues of irredeemable paper atpar with specie. 

In his speech occur these words: "You can, indeed, arrange it so thatthe people shall be forced to take a thousand _livres_ in paper for athousand _livres_ in specie; but you can never arrange it so that a manshall be obliged to give a thousand _livres_ in specie for a thousand_livres_ in paper, --in that fact is embedded the entire question; and onaccount of that fact the whole system fails. " [22]

The nation at large now began to take part in the debate; thoughtfulmen saw that here was the turning Point between good and evil, that thenation stood at the parting of the ways. Most of the great commercialcities bestirred themselves and sent up remonstrances against the newemission, --twenty-five being opposed and seven in favor of it. 

But eloquent theorists arose to glorify paper and among these, Royer, who on September 14, 1790, put forth a pamphlet entitled "Reflections ofa patriotic Citizen on the issue of _Assignats_, " in which he gave manyspecious reasons of the why the _assignats_ could not be depressed, andspoke of the argument against them as "vile clamors of people bribedto affect public opinion. " He said to the National Assembly, "If itis necessary to create five thousand millions, and more, of the paper, decree such a creation gladly. " He, too, predicted, as many others haddone, a time when gold was to lose all its value, since all exchangeswould be made with this admirable, guaranteed paper, and therefore thatcoin would come out from the places where it was hoarded. He foretoldprosperous times to France in case these great issues of paper werecontinued and declared these "the only means to insure happiness, gloryand liberty to the French nation. " Speeches like this gave courage toa new swarm of theorists, --it began to be especially noted that men whohad never shown any ability to make or increase fortunes for themselvesabounded in brilliant plans for creating and increasing wealth for thecountry at large. 

Greatest force of all, on September 27, 1790, came Mirabeau's finalspeech. The most sober and conservative of his modern opponents speaksof its eloquence as "prodigious. " In this the great orator dwelt firston the political necessity involved, declaring that the most pressingneed was to get the government lands into the hands of the people, andso to commit to the nation and against the old privileged classes theclass of landholders thus created. 

Through the whole course of his arguments there is one leading pointenforced with all his eloquence and ingenuity--the excellence of theproposed currency, its stability and its security. He declares that, being based on the pledge of public lands and convertible into them, thenotes are better secured than if redeemable in specie; that the preciousmetals are only employed in the secondary arts, while the French papermoney represents the first and most real of all property, the source ofall production, the land; that while other nations have been obliged toemit paper money, none have ever been so fortunate as the French nation, for the reason that none had ever before been able to give this landedsecurity; that whoever takes French paper money has practically amortgage to secure it, --and on landed property which can easily be soldto satisfy his claims, while other nations have been able only to give avague claim on the entire nation. "And, " he ones, "I would rather have amortgage on a garden than on a kingdom!"

Other arguments of his are more demagogical. He declares that the onlyinterests affected will be those of bankers and capitalists, butthat manufacturers will see prosperity restored to them. Some of hisarguments seem almost puerile, as when he says, "If gold has beenhoarded through timidity or malignity, the issue of paper will show thatgold is not necessary, and it will then come forth. " But, as a whole, the speech was brilliant; it was often interrupted by applause; itsettled the question. People did not stop to consider that it was thedashing speech of an orator and not the matured judgment of a financialexpert; they did not see that calling Mirabeau or Talleyrand to adviseupon a monetary policy, because they had shown boldness in danger andstrength in conflict, was like summoning a prize-fighter to mend awatch. 

In vain did Maury show that, while the first issues of John Law's paperhad brought prosperity, those that followed brought misery; in vain didhe quote from a book published in John Law's time, showing that Law wasat first considered a patriot and friend of humanity; in vain did hehold up to the Assembly one of Law's bills and appeal to their memoriesof the wretchedness brought upon France by them; in vain did Du Pontpresent a simple and really wise plan of substituting notes in thepayment of the floating debt which should not form a part of theordinary circulating medium; nothing could resist the eloquence ofMirabeau. Barnave, following, insisted that "Law's paper was basedupon the phantoms of the Mississippi; ours, upon the solid basis ofecclesiastical lands, " and he proved that the _assignats_ could notdepreciate further. Prudhomme's newspaper poured contempt over gold assecurity for the currency, extolled real estate as the only true basisand was fervent in praise of the convertibility and self-adjustingfeatures of the proposed scheme. In spite of all this plausibility andeloquence, a large minority stood firm to their earlier principles; buton the 29th of September, 1790, by a vote of 508 to 423, the deed wasdone; a bill was passed authorizing the issue of eight hundred millionsof new _assignats_, but solemnly declaring that in no case should theentire amount put in circulation exceed twelve hundred millions. To makeassurance doubly sure, it also provided that as fast as the _assignats_were paid into the treasury for land they should be burned, and thus ahealthful contraction be constantly maintained. Unlike the first issue, these new notes were to bear no interest. [23]

Great were the plaudits of the nation at this relief. Among themultitudes of pamphlets expressing this joy which have come down to usthe "Friend of the Revolution" is the most interesting. It begins asfollows: "Citizens, the deed is done. The _assignats_ are the keystoneof the arch. It has just been happily put in position. Now I canannounce to you that the Revolution is finished and there only remainone or two important questions. All the rest is but a matter of detailwhich cannot deprive us any longer of the pleasure of admiring thisimportant work in its entirety. The provinces and the commercial citieswhich were at first alarmed at the proposal to issue so much paper moneynow send expressions of their thanks; specie is coming out to be joinedwith paper money. Foreigners come to us from all parts of Europe to seektheir happiness under laws which they admire; and soon France, enrichedby her new property and by the national industry which is preparing forfruitfulness, will demand still another creation of paper money. "

France was now fully committed to a policy of inflation; and, if therehad been any question of this before, all doubts were removed now byvarious acts very significant as showing the exceeding difficulty ofstopping a nation once in the full tide of a depreciating currency. TheNational Assembly had from the first shown an amazing liberality to allsorts of enterprises, wise or foolish, which were urged "for the good ofthe people. " As a result of these and other largesses the old cry of the"lack of a circulating medium" broke forth again; and especially loudwere the clamors for more small bills. The cheaper currency had largelydriven out the dearer; paper had caused small silver and copper moneymainly to disappear; all sorts of notes of hand, circulating under thename of "confidence bills, " flooded France--sixty-three kinds in Parisalone. This unguaranteed currency caused endless confusion and fraud. Different districts of France began to issue their own _assignats_ insmall denominations, and this action stirred the National Assembly toevade the solemn pledge that the circulation should not go above twelvehundred millions and that all _assignats_ returned to the treasury forlands should immediately be burned. [24] Within a short time there hadbeen received into the treasury for lands one hundred and sixty million_livres_ in paper. By the terms of the previous acts this amount ofpaper ought to have been retired. Instead of this, under the plea ofnecessity, the greater part of it was reissued in the form of smallnotes. 

There was, indeed, much excuse for new issues of small notes, for, underthe theory that an issue of smaller notes would drive silver out ofcirculation, the smallest authorized _assignat_ was for fifty _livres_. To supply silver and copper and hold it in circulation everything wastried. Citizens had been spurred on by law to send their silverware andjewels to the mint. Even the king sent his silver and gold plate, andthe churches and convents were required by law to send to the governmentmelting pot all silver and gold vessels not absolutely necessary forpublic worship. For copper money the church bells were melted down. Butsilver and even copper continued to become more and more scarce. In themidst of all this, various juggleries were tried, and in November, 1790, the Assembly decreed a single standard of coinage, the chosen metalbeing silver, and the ratio between the two precious metals waschanged from 15 1/2 to 1, to 14 1/2 to 1--but all in vain. It was foundnecessary to issue the dreaded small paper, and a beginning was made byissuing one hundred millions in notes of five _francs_, and, ere long, obedient to the universal clamor, there were issued parchment notes forvarious small amounts down to a single _sou_. [25]

Yet each of these issues, great or small, was but as a drop of coldwater to a parched throat. Although there was already a rise in priceswhich showed that the amount needed for circulation had been exceeded, the cry for "more circulating medium" was continued. The pressure fornew issues became stronger and stronger. The Parisian populace and theJacobin Club were especially loud in their demands for them; and, a fewmonths later, on June 19, 1791, with few speeches, in a silence veryominous, a new issue was made of six hundred millions more;--less thannine months after the former great issue, with its solemn pledgesto keep down the amount in circulation. With the exception of a fewthoughtful men, the whole nation again sang paeans. [26]

In this comparative ease of new issues is seen the action of a lawin finance as certain as the working of a similar law in naturalphilosophy. If a material body fall from a height its velocity isaccelerated, by a well-known law, in a constantly increasing ratio: soin issues of irredeemable currency, in obedience to the theories of alegislative body or of the people at large, there is a natural law ofrapidly increasing emission and depreciation. The first inflation billswere passed with great difficulty, after very sturdy resistance and bya majority of a few score out of nearly a thousand votes; but we observenow that new inflation measures were passed more and more easily andwe shall have occasion to see the working of this same law in a morestriking degree as this history develops itself. 

During the various stages of this debate there cropped up a doctrineold and ominous. It was the same which appeared toward the end of thenineteenth century in the United States during what became known as the"greenback craze" and the free "silver craze. " In France it hadbeen refuted, a generation before the Revolution, by Turgot, just asbrilliantly as it was met a hundred years later in the United Statesby James A. Garfield and his compeers. This was the doctrine that allcurrency, whether gold, paper, leather or any other material, derivesits efficiency from the official stamp it bears, and that, this beingthe case, a government may relieve itself of its debts and make itselfrich and prosperous simply by means of a printing press:--fundamentallythe theory which underlay the later American doctrine of "fiat money. "

There came mutterings and finally speeches in the Jacobin Club, in theAssembly and in newspaper articles and pamphlets throughout the country, taking this doctrine for granted. These could hardly affect thinkingmen who bore in mind the calamities brought upon the whole people, and especially upon the poorer classes, by this same theory as put inpractice by John Law, or as refuted by Turgot, but it served to swellthe popular chorus in favor of the issue of more _assignats_ and plentyof them. [27]

The great majority of Frenchmen now became desperate optimists, declaring that inflation is prosperity. Throughout France there cametemporary good feeling. The nation was becoming inebriated with papermoney. The good feeling was that of a drunkard just after his draught;and it is to be noted as a simple historical fact, corresponding to aphysiological fact, that, as draughts of paper money came faster thesuccessive periods of good feeling grew shorter. 

Various bad signs began to appear. Immediately after each new issue camea marked depreciation; curious it is to note the general reluctance toassign the right reason. The decline in the purchasing power of papermoney was in obedience to the simplest laws in economics, but France hadnow gone beyond her thoughtful statesmen and taken refuge in unwaveringoptimism, giving any explanation of the new difficulties rather than theright one. A leading member of the Assembly insisted, in an elaboratespeech, that the cause of depreciation was simply the want of knowledgeand of confidence among the rural population and he suggested means ofenlightening them. La Rochefoucauld proposed to issue an address tothe people showing the goodness of the currency and the absurdity ofpreferring coin. The address was unanimously voted. As well might theyhave attempted to show that a beverage made by mixing a quart of wineand two quarts of water would possess all the exhilarating quality ofthe original, undiluted liquid. 

Attention was aroused by another menacing fact;--specie disappearedmore and more. The explanations of this fact also displayed wonderfulingenuity in finding false reasons and in evading the true one. Avery common explanation was indicated in Prudhomme's newspaper, "LesRévolutions de Paris, " of January 17, 1791, which declared that coin"will keep rising until the people shall have hanged a broker. " Anotherpopular theory was that the Bourbon family were, in some mysterious way, drawing off all solid money to the chief centers of their intrigues inGermany. Comic and, at the same time, pathetic, were evidences of thewide-spread idea that if only a goodly number of people engaged in tradewere hanged, the par value of the _assignats_ would be restored. 

Still another favorite idea was that British emissaries were in themidst of the people, instilling notions hostile to paper. Great effortswere made to find these emissaries and more than one innocent personexperienced the popular wrath under the supposition that he was engagedin raising gold and depressing paper. Even Talleyrand, shrewd as he was, insisted that the cause was simply that the imports were too great andthe exports too little. [28] As well might he explain that fact that, when oil is mingled with water, water sinks to the bottom, by sayingthat this is because the oil rises to the top. This disappearance ofspecie was the result of a natural law as simple and as sure in itsaction as gravitation; the superior currency had been withdrawn becausean inferior currency could be used. [29] Some efforts were made to remedythis. In the municipality of Quilleboeuf a considerable amount in speciehaving been found in the possession of a citizen, the money was seizedand sent to the Assembly. The people of that town treated this hoardedgold as the result of unpatriotic wickedness or madness, instead ofseeing that it was but the sure result of a law working in every landand time, when certain causes are present. Marat followed out thistheory by asserting that death was the proper penalty for persons whothus hid their money. 

Still another troublesome fact began now to appear. Though paper moneyhad increased in amount, prosperity had steadily diminished. In spite ofall the paper issues, commercial activity grew more and more spasmodic. Enterprise was chilled and business became more and more stagnant. Mirabeau, in his speech which decided the second great issue of paper, had insisted that, though bankers might suffer, this issue would be ofgreat service to manufacturers and restore prosperity to them and theirworkmen. The latter were for a time deluded, but were at last rudelyawakened from this delusion. The plenty of currency had at firststimulated production and created a great activity in manufactures, butsoon the markets were glutted and the demand was diminished. In spite ofthe wretched financial policy of years gone by, and especially in spiteof the Revocation of the Edict of Nantes, by which religious bigotryhad driven out of the kingdom thousands of its most skillful Protestantworkmen, the manufactures of France had before the Revolution come intofull bloom. In the finer woolen goods, in silk and satin fabrics of allsorts, in choice pottery and porcelain, in manufactures of iron, steel, and copper, they had again taken their old leading place upon theContinent. All the previous changes had, at the worst, done no morethan to inflict a momentary check on this highly developed system ofmanufactures. But what the bigotry of Louis XIV and the shiftlessnessof Louis XV could not do in nearly a century, was accomplished by thistampering with the currency in a few months. One manufactory afteranother stopped. At one town, Lodève, five thousand workmen weredischarged from the cloth manufactories. Every cause except the rightone was assigned for this. Heavy duties were put upon foreign goods;everything that tariffs and custom-houses could do was done. Still thegreat manufactories of Normandy were closed, those of the rest of thekingdom speedily followed, and vast numbers of workmen in all parts ofthe country were thrown out of employment. [30] Nor was this the casewith the home demand alone. The foreign demand, which at first had beenstimulated, soon fell off. In no way can this be better stated than byone of the most thoughtful historians of modern times, who says, "It istrue that at first the _assignats_ gave the same impulse to businessin the city as in the country, but the apparent improvement had no firmfoundation, even in the towns. Whenever a great quantity of paper moneyis suddenly issued we invariably see a rapid increase of trade. Thegreat quantity of the circulating medium sets in motion all the energiesof commerce and manufactures; capital for investment is more easilyfound than usual and trade perpetually receives fresh nutriment. If thispaper represents real credit, founded upon order and legal security, from which it can derive a firm and lasting value, such a movement maybe the starting point of a great and widely-extended prosperity, as, forinstance, a splendid improvement in English agriculture was undoubtedlyowing to the emancipation of the country bankers. If on the contrary, the new paper is of precarious value, as was clearly seen to be the casewith the French _assignats_ as early as February, 1791, it can confer nolasting benefits. For the moment, perhaps, business receives an impulse, all the more violent because every one endeavors to invest his doubtfulpaper in buildings, machines and goods, which, under all circumstances, retain some intrinsic value. Such a movement was witnessed in Francein 1791, and from every quarter there came satisfactory reports of theactivity of manufactures. "

"But, for the moment, the French manufacturers derived great advantagefrom this state of things. As their products could be so cheaply paidfor, orders poured in from foreign countries to such a degree that itwas often difficult for the manufacturers to satisfy their customers. It is easy to see that prosperity of this kind must very soon findits limit.... When a further fall in the _assignats_ took place thisprosperity would necessarily collapse, and be succeeded by a crisisall the more destructive the more deeply men had engaged in speculationunder the influence of the first favorable prospects. " [31]

Thus came a collapse in manufacturing and commerce, just as it had comepreviously in France: just as it came at various periods in Austria, Russia, America, and in all countries where men have tried to build upprosperity on irredeemable paper. [32]

All this breaking down of the manufactures and commerce of the nationmade fearful inroads on the greater fortunes; but upon the lesser, andupon the little properties of the masses of the nation who relied upontheir labor, it pressed with intense severity. The capitalist could puthis surplus paper money into the government lands and await results; butthe men who needed their money from day to day suffered the worst ofthe misery. Still another difficulty appeared. There had come a completeuncertainty as to the future. Long before the close of 1791 no one knewwhether a piece of paper money representing a hundred _livres_ would, a month later, have a purchasing power of ninety or eighty or sixty_livres_. The result was that capitalists feared to embark their meansin business. Enterprise received a mortal blow. Demand for labor wasstill further diminished; and here came a new cause of calamity: forthis uncertainty withered all far-reaching undertakings. The businessof France dwindled into a mere living from hand to mouth. This state ofthings, too, while it bore heavily upon the moneyed classes, wasstill more ruinous to those in moderate and, most of all, to those instraitened circumstances. With the masses of the people, the purchase ofevery article of supply became a speculation--a speculation in whichthe professional speculator had an immense advantage over the ordinarybuyer. Says the most brilliant of apologists for French revolutionarystatesmanship, "Commerce was dead; betting took its place. " [33]

Nor was there any compensating advantage to the mercantile classes. Themerchant was forced to add to his ordinary profit a sum sufficient tocover probable or possible fluctuations in value, and while prices ofproducts thus went higher, the wages of labor, owing to the number ofworkmen who were thrown out of employment, went lower. 

But these evils, though great, were small compared to those far moredeep-seated signs of disease which now showed themselves throughout thecountry. One of these was the _obliteration of thrift_ from the mindsof the French people. The French are naturally thrifty; but, with suchmasses of money and with such uncertainty as to its future value, theordinary motives for saving and care diminished, And a loose luxuryspread throughout the country. A still worse outgrowth was the increaseof speculation and gambling. With the plethora of paper currency in1791 appeared the first evidences of that cancerous disease whichalways follows large issues of irredeemable currency, --a disease morepermanently injurious to a nation than war, pestilence or famine. Forat the great metropolitan centers grew a luxurious, speculative, stock-gambling body, which, like a malignant tumor, absorbed into itselfthe strength of the nation and sent out its cancerous fibres to theremotest hamlets. At these city centers abundant wealth seemed to bepiled up: in the country at, large there grew a dislike of steady laborand a contempt for moderate gains and simple living. In a pamphletpublished in May, 1791, we see how, in regard to this also, publicopinion was blinded. The author calls attention to the increase ofgambling in values of all sorts in these words: "What shall I say of thestock-jobbing, as frightful as it is scandalous, which goes on in Parisunder the very eyes of our legislators, --a most terrible evil, yet, under the present circumstances, --necessary?" The author also speaksof these stock-gamblers as using the most insidious means to influencepublic opinion in favor of their measures; and then proposes, seriously, a change in various matters of detail, thinking that this would prove asufficient remedy for an evil which had its roots far down in the wholesystem of irredeemable currency. As well might a physician prescribe apimple wash for a diseased liver. [34]

Now began to be seen more plainly some of the many ways in which aninflation policy robs the working class. As these knots of plottingschemers at the city centers were becoming bloated with sudden wealth, the producing classes of the country, though having in their possessionmore and more currency, grew lean. In the schemes and speculations putforth by stock-jobbers and stimulated by the printing of more currency, multitudes of small fortunes were absorbed and lost while a few swollenfortunes were rapidly aggregated in the larger cities. This crippled alarge class in the country districts, which had employed a great numberof workmen. 

In the leading French cities now arose a luxury and license which wasa greater evil even than the plundering which ministered to it. Inthe country the gambling spirit spread more and more. Says the samethoughtful historian whom I have already quoted: "What a prospect fora country when its rural population was changed into a great band ofgamblers!" [35]

Nor was this reckless and corrupt spirit confined to business men; itbegan to break out in official circles, and public men who, a fewyears before, had been thought above all possibility of taint, becameluxurious, reckless, cynical and finally corrupt. Mirabeau, himself, who, not many months previous, had risked imprisonment and even deathto establish constitutional government, was now--at this verytime--secretly receiving heavy bribes. When, at the downfall of themonarchy a few years later, the famous iron chest of the Tuileries wasopened, there were found evidences that, in this carnival of inflationand corruption, he had been a regularly paid servant of the Royalcourt. [36] The artful plundering of the people at large was bad enough, but worse still was this growing corruption in official and legislativecircles. Out of the speculating and gambling of the inflation periodgrew luxury, and, out of this, corruption. It grew as naturally as afungus on a muck heap. It was first felt in business operations, but soon began to be seen in the legislative body and in journalism. Mirabeau was, by no means, the only example. Such members of thelegislative body as Jullien of Toulouse, Delaunay of Angers, Fabred'Eglantine and their disciples, were among the most noxious of thoseconspiring by legislative action to raise and depress securities forstock-jobbing purposes. Bribery of legislators followed as a matter ofcourse, Delaunay, Jullien and Chabot accepted a bribe of five hundredthousand _livres_ for aiding legislation calculated to promote thepurposes of certain stock-jobbers. It is some comfort to know thatnearly all concerned were guillotined for it. [37]

It is true that the number of these corrupt legislators was small, farless than alarmists led the nation to suppose, but there were enough tocause wide-spread distrust, cynicism and want of faith in any patriotismor any virtue. 

II. 

Even worse than this was the breaking down of the morals of the countryat large, resulting from the sudden building up of ostentatious wealthin a few large cities, and from the gambling, speculative spiritspreading from these to the small towns and rural districts. From thiswas developed an even more disgraceful result, --the decay of a truesense of national good faith. The patriotism which the fear of theabsolute monarchy, the machinations of the court party, the menaces ofthe army and the threats of all monarchical Europe had been unableto shake was gradually disintegrated by this same speculative, stock-jobbing habit fostered by the superabundant currency. At theoutset, in the discussions preliminary to the first issue of papermoney, Mirabeau and others who had favored it had insisted thatpatriotism as well as an enlightened self-interest, would lead thepeople to keep up the value of paper money. The very opposite of thiswas now revealed, for there appeared, as another outgrowth of thisdisease, what has always been seen under similar circumstances. It isa result of previous, and a cause of future evils. This outgrowth was avast debtor class in the nation, directly interested in the depreciationof the currency in which they were to pay their debts. The nucleus ofthis class was formed by those who had purchased the church lands fromthe government. Only small payments down had been required and theremainder was to be paid in deferred installments: an indebtedness of amultitude of people had thus been created to the amount of hundreds ofmillions. This body of debtors soon saw, of course, that their interestwas to depreciate the currency in which their debts were to be paid;and these were speedily joined by a far more influential class;--by thatclass whose speculative tendencies had been stimulated by the abundanceof paper money, and who had gone largely into debt, looking for a risein nominal values. Soon demagogues of the viler sort in the politicalclubs began to pander to it; a little later important persons in thisdebtor class were to be found intriguing in the Assembly--first in itsseats and later in more conspicuous places of public trust. Before long, the debtor class became a powerful body extending through all ranks ofsociety. From the stock-gambler who sat in the Assembly to the smallland speculator in the rural districts; from the sleek inventor of_canards_ on the Paris Exchange to the lying stock-jobber in themarket town, all pressed vigorously for new issues of paper; all wereapparently able to demonstrate to the people that in new issues of paperlay the only chance for national prosperity. 

This great debtor class, relying on the multitude who could beapproached by superficial arguments, soon gained control. Strange as itmight seem to those who have not watched the same causes at work at aprevious period in France and at various times in other countries, whileevery issue of paper money really made matters worse, a superstitiongained ground among the people at large that, if only _enough_ papermoney were issued and were more cunningly handled the poor would be maderich. Henceforth, all opposition was futile. In December, 1791, a reportwas made in the Legislative Assembly in favor of yet another great issueof three hundred millions more of paper money. In regard to this reportCambon said that more money was needed but asked, "Will you, in a momentwhen stock-jobbing is carried on with such fury, give it new power byadding so much more to the circulation?" But such high considerationswere now little regarded. Dorisy declared, "There is not enough moneyyet in circulation; if there were more the sales of national lands wouldbe more rapid. " And the official report of his speech states that thesewords were applauded. 

Dorisy then went on to insist that the government lands were worth atleast thirty-five hundred million _livres_ and said: "Why should membersascend the tribunal and disquiet France? Fear nothing; your currencyreposes upon a sound mortgage. " Then followed a glorification of thepatriotism of the French people, which, he asserted, would carry thenation through all its difficulties. 

Becquet, speaking next, declared that "The circulation is becoming morerare every day. "

On December 17, 1791, a new issue was ordered, making in all twenty-onehundred millions authorized. Coupled with this was the declaration thatthe total amount in actual circulation should never reach more thansixteen hundred millions. Before this issue the value of the 100_livres_ note had fallen at Paris to about 80 _livres_; [38] immediatelyafterward it fell to about 68 _livres_. What limitations of the currencywere worth may be judged from the fact that not only had the declarationmade hardly a year before, limiting the amount in circulation to twelvehundred millions, been violated, but the declaration, made hardly amonth previous, in which the Assembly had as solemnly limited the amountof circulation to fourteen hundred millions, had also been repudiated. 

The evils which we have already seen arising from the earlier issueswere now aggravated; but the most curious thing evolved out of all thischaos was a _new system of political economy_. In speeches, newspapersand pamphlets about this time, we begin to find it declared that, afterall, a depreciated currency is a blessing; that gold and silver form anunsatisfactory standard for measuring values: that it is a good thing tohave a currency that will not go out of the kingdom and which separatesFrance from other nations: that thus shall manufacturers be encouraged;that commerce with other nations may be a curse, and hindrance theretomay be a blessing; that the laws of political economy however applicablein other times, are not applicable to this particular period, and, however operative in other nations, are not now so in France; that theordinary rules of political economy are perhaps suited to the minions ofdespotism but not to the free and enlightened inhabitants of France atthe close of the eighteenth century; that the whole state of presentthings, so far from being an evil is a blessing. All these ideas, andothers quite as striking, were brought to the surface in the debates onthe various new issues. [39]

Within four months came another report to the Assembly as ingenious asthose preceding. It declared: "Your committee are thoroughly persuadedthat the amount of the circulating medium before the Revolution wasgreater than that of the _assignats_ today: but at that time the moneycirculated slowly and now it passes rapidly so that one thousand million_assignats_ do the work of two thousand millions of specie. " The reportforetells further increase in prices, but by some curious juggleryreaches a conclusion favorable to further inflation. Despite theseencouragements the _assignats_ nominally worth 100 _livres_ had fallen, at the beginning of February, 1792, to about 60 _livres_, and duringthat month fell to 53 _livres_. [40]

In March, Clavière became minister of finance. He was especially proudof his share in the invention and advocacy of the _assignats_, and nowpressed their creation more vigorously than ever, and on April 30th, ofthe same year, came the fifth great issue of paper money, amounting tothree hundred millions: at about the same time Cambon sneered ominouslyat public creditors as "rich people, old financiers and bankers. "Soon payment was suspended on dues to public creditors for all amountsexceeding ten thousand _francs_. 

This was hailed by many as a measure in the interests of the poorerclasses of people, but the result was that it injured them most of all. Henceforward, until the end of this history, capital was quietly takenfrom labor and locked up in all the ways that financial ingenuity coulddevise. All that saved thousands of laborers in France from starvationwas that they were drafted off into the army and sent to be killed onforeign battlefields. 

On the last day of July, 1792, came another brilliant report fromFouquet, showing that the total amount of currency already issued wasabout twenty-four hundred millions, but claiming that the national landswere worth a little more than this sum. A decree was now passed issuingthree hundred millions more. By this the prices of everything were againenhanced save one thing, and that one thing was labor. Strange as it mayat first appear, while the depreciation of the currency had raised allproducts enormously in price, the stoppage of so many manufactories andthe withdrawal of capital caused wages in the summer of 1792, after allthe inflation, to be as small as they had been four years before--viz. , fifteen _sous_ per day. No more striking example can be seen of thetruth uttered by Daniel Webster, that "of all the contrivances forcheating the laboring classes of mankind, none has been more effectivethan that which deludes them with paper-money. " [41]

Issue after issue followed at intervals of a few months, until, onDecember 14, 1792, we have an official statement to the effect thatthirty-five hundred millions had been put forth, of which six hundredmillions had been burned, leaving in circulation twenty-eight hundredmillions. 

When it is remembered that there was little business to do and thatthe purchasing power of the _livre_ or franc, when judged by the stapleproducts of the country, was equal to about half the present purchasingpower of our own dollar, it will be seen into what evils France haddrifted. As the mania for paper money ran its course, even the _sous_, obtained by melting down the church bells, were more and more driven outof circulation and more and more parchment notes from twenty _four_ tofive were issued, and at last pieces of one _sou_, of half a _sou_ andeven of one-quarter of a _sou_ were put in circulation. [42]

But now another source of wealth was opened to the nation. There came aconfiscation of the large estates of landed proprietors who had fledthe country. An estimate in 1793 made the value of these estates threebillions of _francs_. As a consequence, the issues of paper moneywere continued in increased amounts, on the old theory that they wereguaranteed by the solemn pledge of these lands belonging to the state. Under the Legislative Assembly through the year 1792 new issues weremade virtually every month, so that at the end of January, 1793, itwas more and more realized that the paper money actually in circulationamounted close upon three thousand millions of _francs_. All this hadbeen issued publicly, in open sessions of the National and LegislativeAssemblies; but now under the National Convention, the two Committeesof Public Safety and of Finance began to decree new issues privately, insecret session. 

As a result, the issues became larger still, and four hundred workmenwere added to those previously engaged in furnishing this paper money, and these were so pressed with work from six o'clock in the morninguntil eight in the evening that they struck for higher wages and weresuccessful. [43]

The consequences of these overissues now began to be more painfullyevident to the people at large. Articles of common consumption becameenormously dear and prices were constantly rising. Orators in theLegislative Assembly, clubs, local meetings and elsewhere now endeavoredto enlighten people by assigning every reason for this depreciation savethe true one. They declaimed against the corruption of the ministry, thewant of patriotism among the Moderates, the intrigues of the emigrantnobles, the hard-heartedness of the rich, the monopolizing spirit of themerchants, the perversity of the shopkeepers, ---each and all of these ascauses of the difficulty. [44]

This decline in the government paper was at first somewhat masked byfluctuations. For at various times the value of the currency _rose_. Thevictory of Jemappes and the general success of the French army againstthe invaders, with the additional security offered by new confiscationsof land, caused, in November, 1792, an appreciation in the value of thecurrency; the franc had stood at 57 and it rose to about 69; butthe downward tendency was soon resumed and in September, 1793, the _assignats_ had sunk below 30. Then sundry new victories andcoruscations of oratory gave momentary confidence so that in December, 1793, they rose above 50. But despite these fluctuations the downwardtendency soon became more rapid than ever. [45]

The washerwomen of Paris, finding soap so dear that they could hardlypurchase it, insisted that all the merchants who were endeavoring tosave something of their little property by refusing to sell their goodsfor the wretched currency with which France was flooded, should bepunished with death; the women of the markets and the hangers-on of theJacobin Club called loudly for a law "to equalize the value of papermoney and silver coin. " It was also demanded that a tax be laidespecially on the rich, to the amount of four hundred million _francs_, to buy bread. Marat declared loudly that the people, by hangingshopkeepers and plundering stores, could easily remove the trouble. Theresult was that on the 28th of February, 1793, at eight o'clock in theevening, a mob of men and women in disguise began plundering thestores and shops of Paris. At first they demanded only bread; soon theyinsisted on coffee and rice and sugar; at last they seized everythingon which they could lay their hands--cloth, clothing, groceries andluxuries of every kind. Two hundred such places were plundered. This wasendured for six hours and finally order was restored only by a grant ofseven million _francs_ to buy off the mob. The new political economy wasbeginning to bear, its fruits luxuriantly. A gaudy growth of it appearedat the City Hall of Paris when, in response to the complaints of theplundered merchants, Roux declared, in the midst of great applause, that"shopkeepers were only giving back to the people what they had hithertorobbed them of. "

The mob having thus been bought off by concessions and appeased byoratory, the government gained time to think, and now came a series ofamazing expedients, --and yet all perfectly logical. 

Three of these have gained in French history an evil pre-eminence, andfirst of the three was the Forced Loan. 

In view of the fact that the well-to-do citizens were thought to belukewarm in their support of the politicians controlling the country, various demagogues in the National Convention, which had now succeededthe National, Constituent and Legislative Assemblies, found ample matterfor denunciations long and loud. The result outside the Conventionwas increased activity of the guillotine; the results inside were newmeasures against all who had money, and on June 22, 1793, theConvention determined that there should be a Forced Loan, secured on theconfiscated lands of the emigrants and levied upon all married menwith incomes of ten thousand _francs_, and upon all unmarried men withincomes of six thousand _francs_. It was calculated that thesewould bring into the treasury a thousand millions of _francs_. But adifficulty was found. So many of the rich had lied or had concealedtheir wealth that only a fifth of the sum required could be raised, andtherefore a law was soon passed which levied forced loans upon incomesas low as one thousand, _francs_, --or, say, two hundred dollarsof American money. This tax was made progressive. On the smallerproprietors it was fixed at one-tenth and on the larger, that is, on allincomes above nine thousand _francs_, it was made one-half of the entireincome. Little if any provision was made for the repayment of this loanbut the certificates might be used for purchasing the confiscated realestate of the church and of the nobility. [46]

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

As we have seen, the first issue of the _assignats_, --made by theNational Assembly, bore a portrait of the king; but on the variousissues after the establishment of a republic this emblem had beendiscarded. This change led to a difference in value between the earlierand the later paper money. The wild follies of fanatics and demagogueshad led to an increasing belief that the existing state of things couldnot 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 paperissued by the Republic, he would recognize that first issue bearing theface and therefore the guarantee of the king. So it was that this firstissue came to bear a higher value than those of later date. To meet thiscondition of things it was now proposed to repudiate an that earlierissue. In vain did sundry more thoughtful members of the Conventionplead that this paper money, amounting to five hundred and fifty-eightmillions of _francs_, bore the solemn guarantee of the nation, as wellas of the king; the current was irresistible. All that Cambon, the greatleader of finance at that time, could secure was a clause claiming toprotect the poor, to the effect that this demonetization should notextend to notes below a hundred _francs_ in value; and it was alsoagreed that any of the notes, large or small, might be received inpayment of taxes and for the confiscated property of the clergy andnobility. To all the arguments advanced against this breach of thenational faith Danton, then at the height of his power, simply declaredthat only aristocrats could favor notes bearing the royal portrait, andgave forth his famous utterance: "Imitate Nature, which watches over thepreservation of the race but has no regard for individuals. " The decreewas passed on the 31st of July, 1793, yet its futility was apparent inless than two months, when the Convention decreed that there should beissued two thousand millions of _francs_ more in _assignats_ between thevalues of ten _sous_ and four hundred _francs_, and when, before the endof 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 oflife, had proposed a scheme by which these prices should be establishedby law, at a rate proportionate to the wages of the working classes. This plan lingered in men's minds, taking shape in various resolutionsand decrees until the whole culminated on September 29, 1793, in the Lawof the _Maximum_. 

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

_First_, the price of each article of necessity was to be fixed at oneand one-third its price in 1790. _Secondly_, all transportation was tobe added at a fixed rate per league. _Thirdly_, five per cent was to beadded for the profit of the wholesaler. _Fourthly_, ten per cent wasto be added for the profit of the retailer. Nothing could look morereasonable. Great was the jubilation. The report was presented andsupported by Barrère, --"the tiger monkey, "--then in all the gloryof his great orations: now best known from his portrait by Macaulay. Nothing could withstand Barrère's eloquence. He insisted that Francehad been suffering from a "_Monarchical_ commerce which only soughtwealth, " while what she needed and what she was now to receive was a"_Republican_ commerce--a commerce of moderate profits and virtuous. " Heexulted in the fact that "France alone enjoys such a commerce, --that itexists in no other nation. " He poured contempt over political economy as"that science which quacks have corrupted, which pedants have obscuredand which academicians have depreciated. " France, he said, has somethingbetter, and he declared in conclusion, "The needs of the people willno longer be spied upon in order that the commercial classes mayarbitrarily take advantage. " [49]

The first result of the _Maximum_ was that every means was taken toevade the fixed price imposed, and the farmers brought in as littleproduce as they possibly could. This increased the scarcity, and thepeople of the large cities were put on an allowance. Tickets were issuedauthorizing the bearer to obtain at the official prices a certainamount of bread or sugar or soap or wood or coal to cover immediatenecessities. [50]

But it was found that the _Maximum_, with its divinely revealed fourrules, could not be made to work well--even by the shrewdest devices. Inthe greater part of France it could not be enforced. As to merchandiseof 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. Shopkeeperstherefore could not sell such goods without ruin. The result was thatvery many went out of business and the remainder forced buyers to payenormous charges under the very natural excuse that the seller riskedhis life in trading at all. That this excuse was valid is easily seenby the daily lists of those condemned to the guillotine, in whichnot infrequently figure the names of men charged with violating the_Maximum_ laws. Manufactures were very generally crippled and frequentlydestroyed, and agriculture was fearfully depressed. To detect goodsconcealed by farmers and shopkeepers, a spy system was establishedwith a reward to the informer of one-third of the value of the goodsdiscovered. To spread terror, the Criminal Tribunal at Strassburg wasordered to destroy the dwelling of any one found guilty of selling goodsabove the price set by law. The farmer often found that he could notraise 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 hecould not afford to sell them at the prices fixed by law, they werefrequently taken from him by force and he was fortunate if paid evenin the depreciated fiat money--fortunate, indeed, if he finally escapedwith his life. [51]

Involved in all these perplexities, the Convention tried to cut theGordian 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 refusedto accept a payment in _assignats_, or accepted _assignats_ at adiscount, should pay a fine of three thousand _francs_; and that any onecommitting this crime a second time should pay a fine of six thousand_francs_ and suffer imprisonment twenty years in irons. Later, on the8th of September, 1793, the penalty for such offences was made death, with confiscation of the criminal's property, and so reward was offeredto any person informing the authorities regarding any such criminaltransaction. To reach the climax of ferocity, the Convention decreed, in May, 1794, that the death penalty should be inflicted on any personconvicted of "having asked, before a bargain was concluded, in whatmoney payment was to be made. " Nor was this all. The great financeminister, Cambon, soon saw that the worst enemies of his policy weregold and silver. Therefore it was that, under his lead, the Conventionclosed the Exchange and finally, on November 13, 1793, under terrifyingpenalties, suppressed all commerce in the precious metals. About a yearlater 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 currencynot based on the idea of redemption in standard coin recognized in thecommerce of civilized nations, it intrusts to them the power to raise ordepress the value of every article in the possession of every citizen. Louis XIV had claimed that all property in Prance was his own, and thatwhat private persons held was as much his as if it were in his coffers. But even this assumption is exceeded by the confiscating power exercisedin a country, where, instead of leaving values to be measured by astandard common to the whole world, they are left to be depressed orraised at the whim, caprice or interest of a body of legislators. Whenthis power is given, the power of prices is inevitably included init. [53]

It may be said that these measures were made necessary by the war thengoing on. Nothing could be more baseless than such an objection. In thiswar the French soon became generally successful. It was quickly pushedmainly upon foreign soil. Numerous contributions were levied upon thesubjugated countries to support the French armies. The war was one ofthose in which the loss, falling apparently on future generations, firststimulates, in a sad way, trade and production. The main cause of theseevils was tampering with the circulating medium of an entire nation;keeping all values in fluctuation; discouraging enterprise; paralyzingenergy; undermining sobriety; obliterating thrift; promotingextravagance and exciting riot by the issue of an irredeemable currency. The true business way of meeting the enormous demands on France duringthe first years of the Revolution had been stated by a true statesmanand sound financier, Du Pont de Nemours, at the very beginning. He hadshown that using the same paper as a circulating medium and as a meansfor selling the national real estate was like using the same implementfor an oyster knife and a razor. [54]

It has been argued that the _assignats_ sank in value because they werenot well secured, --that securing them on government real estate was asfutile as if the United States had, in the financial troubles of itsearly days, secured notes on its real estate. This objection is utterlyfallacious. The government lands of our country were remote from thecenters of capital and difficult to examine; the French national realestate was near these centers--even _in_ them--and easy to examine. Our national real estate was unimproved and unproductive; theirswas improved and productive--its average productiveness in market inordinary times being from four to five per cent. [55]

It has also been objected that the attempt to secure the _assignats_ ongovernment real estate failed because of the general want of confidencein the title derived by the purchasers from the new government. Everythorough student of that period must know that this is a misleadingstatement. Everything shows that the vast majority of the French peoplehad a fanatical confidence in the stability of the new government duringthe greater part of the Revolution. There were disbelievers in thesecurity of the _assignats_ just as there were disbelievers in thepaper money of the United States throughout our Civil War; but they wereusually a small minority. Even granting that there was a doubt as toinvestment in French lands, the French people certainly had as muchconfidence in the secure possession of government lands as any peoplecan ever have in large issues of government bonds: indeed, it is certainthat they had far more confidence in their lands as a security thanmodern nations can usually have in large issues of bonds obtained bypayments of irredeemable paper. One simple fact, as stated by JohnStuart Mill, which made _assignats_ difficult to convert into realestate was that the vast majority of people could not afford to makeinvestments outside their business; and this fact is no less fatalto any attempt to contract large issues of irredeemable paper--save, perhaps, a bold, statesmanlike attempt, which seizes the best time andpresses every advantage, eschewing all juggling devices and sacrificingeverything to maintain a sound currency based on standards common to theentire financial world. 

And now was seen, taking possession of the nation, that idea whichdeveloped so easily out of the fiat money system;--the idea that theordinary needs of government may be legitimately met wholly by the meansof paper currency;--that taxes may be dispensed with. As a result, itwas found that the _assignat_ printing press was the one resource leftto the government, and the increase in the volume of paper money becameevery day more appalling. 

It will doubtless surprise many to learn that, in spite of these evidentresults of too much currency, the old cry of a "scarcity of circulatingmedium" was not stilled; it appeared not long after each issue, nomatter how large. 

But every thoughtful student of financial history knows that this cryalways comes after such issues--nay, that it _must_ come, --becausein obedience to a natural law, the former scarcity, or rather_insufficiency_ of currency recurs just as soon as prices becomeadjusted to the new volume, and there comes some little revival ofbusiness with the usual increase of credit. [56]

In August, 1793, appeared a new report by Cambon. No one can read itwithout being struck by its mingled ability and folly. His final planof 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 papermoney was leading straight to, ruin, Cambon carried the majority inthe great assemblies and clubs by sheer audacity--the audacity ofdesperation. Zeal in supporting the _assignats_ became his religion. TheNational Convention which succeeded the Legislative Assembly, issued in1793 over three thousand millions of _assignats_, and, of these, overtwelve hundred millions were poured into the circulation. And yet Cambonsteadily insisted that the security for the _assignat_ currency wasperfect. The climax of his zeal was reached when he counted as assetsin the national treasury the indemnities which, he declared, Francewas sure to receive after future victories over the allied nationswith which she was then waging a desperate war. As patriotism, it wassublime; as finance it was deadly. [57]

Everything was tried. Very elaborately he devised a funding schemewhich, taken in connection with his system of issues, was in effectwhat in these days would be called an "_interconvertibility scheme_" Byvarious degrees of persuasion or force, --the guillotine looming up inthe background, --holders of _assignats_ were urged to convert them intoevidence of national debt, bearing interest at five per cent, with theunderstanding that if more paper were afterward needed more would beissued. All in vain. The official tables of depreciation show that the_assignats_ continued to fall. A forced loan, calling in a billionof these, checked this fall, but only for a moment. The"_interconvertibility scheme_" between currency and bonds failed asdismally as the "_interconvertibility scheme_" between currency and landhad failed. [58]

A more effective expedient was a law confiscating the property of allFrenchmen 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 ifit resulted from the direct action of men utterly unskilled in finance. This is a grave error. That wild schemers and dreamers took a leadingpart in setting the fiat money system going is true; that speculationand interested financiers made it worse is also true: but the men whohad charge of French finance during the Reign of Terror and who madethese experiments, which seem to us so monstrous, in order to rescuethemselves and their country from the flood which was sweepingeverything to financial ruin were universally recognized as among themost skillful and honest financiers in Europe. Cambon, especially, ranked then and ranks now as among the most expert in any period. Thedisastrous results of all his courage and ability in the attempt tostand against the deluge of paper money show how powerless are the mostskillful masters of finance to stem the tide of fiat money calamitywhen once it is fairly under headway; and how useless are all enactmentswhich they can devise against the underlying laws of nature. 

Month after month, year after year new issues went on. Meanwhileeverything possible was done to keep up the value of paper. The cityauthorities of Metz took a solemn oath that the _assignats_ should bearthe same price whether in paper or specie, --and whether in buyingor selling, and various other official bodies throughout the nationfollowed this example. In obedience to those who believed with themarket women of Paris, as stated in their famous petition, that "lawsshould be passed making paper money as good as gold, " Couthon, inAugust, 1793, had proposed and carried a law punishing any personwho should sell _assignats_ at less than their nominal value withimprisonment for twenty years in chains, and later carried a law makinginvestments in foreign countries by Frenchmen punishable with death. [59]

But to the surprise of the great majority of the French people, thevalue of the _assignats_ was found, after the momentary spasm of fearhad passed, not to have been permanently increased by these measures: onthe contrary, this "fiat" paper persisted in obeying the natural laws offinance and, as new issues increased, their value decreased. Nor did themost lavish aid of nature avail. The paper money of the nation seemed topossess a magic power to transmute prosperity into adversity and plentyinto famine. The year 1794 was exceptionally fruitful: and yet with theautumn came scarcity of provisions and with the winter came distress. The reason is perfectly simple. The sequences in that whole history areabsolutely logical. First, the Assembly had inflated the currency andraised prices enormously. Next, it had been forced to establish anarbitrary maximum price for produce. But this price, large as itseemed, soon fell below the real value of produce; many of the farmers, therefore, raised less produce or refrained from bringing what they hadto market. [60] But, as is usual in such cases, the trouble was ascribedto everything rather than the real cause, and the most severe measureswere established in all parts of the country to force farmers to bringproduce to market, millers to grind and shopkeepers to sell it. [61] Theissues of paper money continued. Toward the end of 1794 seven thousandmillions in _assignats_ were in circulation. [62] By the end of May, 1795, the circulation was increased to ten thousand millions, at theend of July, to fourteen thousand millions; and the value of one hundred_francs_ in paper fell steadily, first to four _francs_ in gold, then tothree, then to two and one-half. [63] But, curiously enough, while thisdepreciation was rapidly going on, as at various other periods whendepreciation was rapid, there came an apparent revival of business. Thehopes of many were revived by the fact that in spite of the decline ofpaper there was an exceedingly brisk trade in all kinds of permanentproperty. Whatever articles of permanent value certain needy people werewilling to sell certain cunning people were willing to buy and to paygood prices for in _assignats_. At this, hope revived for a time incertain quarters. But ere long it was discovered that this was one ofthe most distressing results of a natural law which is sure to come intoplay under such circumstances. It was simply a feverish activity causedby the intense desire of a large number of the shrewder class to converttheir paper money into anything and everything which they could hold andhoard until the collapse which they foresaw should take place. This veryactivity in business simply indicated the disease. It was simply legalrobbery of the more enthusiastic and trusting by the more cold-heartedand keen. It was, the "unloading" of the _assignats_ upon the mass ofthe people. [64]

Interesting is it to note in the midst of all this the steady actionof another simple law in finance. Prisons, guillotines, enactmentsinflicting twenty years' imprisonment in chains upon persons twiceconvicted of buying or selling paper money at less than its nominalvalue, and death upon investors in foreign securities, were powerless. The National Convention, fighting a world in arms and with an armedrevolt on its own soil, showed titanic power, but in its struggle tocircumvent one simple law of nature its weakness was pitiable. The_louis d'or_ stood in the market as a monitor, noting each day, withunerring fidelity, the decline in value of the _assignat_; a monitor notto be bribed, not to be scared. As well might the National Conventiontry to bribe or scare away the polarity of the mariner's compass. OnAugust 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 wasworth 7, 200 _francs_ or one franc in gold was worth 288 _francs_ inpaper. Prices of all commodities went up nearly in proportion. [65]The writings of this period give curious details. Thibaudeau, in hisMemoirs, speaks of sugar as 500 _francs_ a pound, soap, 230 _francs_, candles, 140 _francs_. Mercier, in his lifelike pictures of the Frenchmetropolis at that period, mentions 600 _francs_ as carriage hire for asingle drive, and 6, 000 for an entire day. Examples from other sourcesare such as the following:--a measure of flour advanced from two_francs_ in 1790, to 225 _francs_ in 1795; a pair of shoes, fromfive _francs_ to 200; a hat, from 14 _francs_ to 500; butter, to, 560 _francs_ a pound; a turkey, to 900 _francs_. [66] Everythingwas enormously inflated in price _except the wages of labor_. Asmanufacturers had closed, wages had fallen, until all that kept them upseemed to be the fact that so many laborers were drafted off into thearmy. From this state of things came grievous wrong and gross fraud. Men who had foreseen these results and had gone into debt were of coursejubilant. He who in 1790 had borrowed 10, 000 _francs_ could pay hisdebts in 1796 for about 35 _francs_. Laws were made to meet theseabuses. As far back as 1794 a plan was devised for publishing official"tables of depreciation" to be used in making equitable settlements ofdebts, but all such machinery proved futile. On the 18th of May, 1796, ayoung 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 onethree-hundredth part of the real value of his share. [67] To meet caseslike this, a law was passed establishing a "scale of proportion. " Takingas a standard the value of the _assignat_ when there were two billionsin circulation, this law declared that, in payment of debts, one-quartershould be added to the amount originally borrowed for every five hundredmillions added to the circulation. In obedience to this law a manwho borrowed two thousand _francs_ when there were two billions incirculation would have to pay his creditors twenty-five hundred_francs_ when half a billion more were added to the currency, and overthirty-five thousand _francs_ before the emissions of paper reachedtheir final amount. This brought new evils, worse, if possible, than theold. [68]

The question will naturally be asked, _On whom did this vastdepreciation mainly fall at last_? When this currency had sunk toabout 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. Ishall give it in the exact words of that thoughtful historian from whomI have already quoted: "Before the end of the year 1795 the paper moneywas almost exclusively in the hands of the working classes, employeesand men of small means, whose property was not large enough to invest instores of goods or national lands. [69] Financiers and men of large meanswere shrewd enough to put as much of their property as possible intoobjects of permanent value. The working classes had no such foresightor skill or means. On them finally came the great crushing weight of theloss. After the first collapse came up the cries of the starving. Roadsand bridges were neglected; many manufactures were given up in utterhelplessness. " To continue, in the words of the historian already cited:"None felt any confidence in the future in any respect; few dared tomake a business investment for any length of time and it was accounted afolly to curtail the pleasures of the moment, to accumulate or save forso uncertain a future. " [70]

This system in finance was accompanied by a system in politics no lessstartling, and each system tended to aggravate the other. The wildradicals, having sent to the guillotine first all the Royalists andnext all the leading Republicans they could entrap, the variousfactions began sending each other to the same destination:--Hébertists, Dantonists, with various other factions and groups, and, finally, theRobespierrists, followed each other in rapid succession. After thesedeclaimers and phrase-mongers had thus disappeared there came to power, in October, 1795, a new government, --mainly a survival of the morescoundrelly, --the Directory. It found the country utterly impoverishedand its only resource at first was to print more paper and to issue evenwhile wet from the press. These new issues were made at last by the twogreat committees, with or without warrant of law, and in greater sumsthan ever. Complaints were made that the array of engravers and printersat the mint could not meet the demand for _assignats_--that theycould produce only from sixty to seventy millions per day and thatthe government was spending daily from eighty to ninety millions. Fourthousand millions of _francs_ were issued during one month, a littlelater three thousand millions, a little later four thousand millions, until there had been put forth over thirty-five thousand millions. Thepurchasing power of this paper having now become almost nothing, it wasdecreed, on the 22nd of December, 1795, that the whole amount issuedshould be limited to forty thousand millions, including all that hadpreviously been put forth and that when this had been done the copperplates should be broken. Even in spite of this, additional issueswere made amounting to about ten thousand millions. But on the 18th ofFebruary, 1796, at nine o'clock in the morning, in the presence of agreat crowd, the machinery, plates and paper for printing _assignats_were brought to the Place Vendome and there, on the spot where theNapoleon Column now stands, these were solemnly broken and burned. 

Shortly afterward a report by Camus was made to the Assembly thatthe entire amount of paper money issued in less than six years by theRevolutionary Government of France had been over forty-five thousandmillions of _francs_--that over six thousand millions had been annulledand burned and that at the final catastrophe there were in circulationclose upon forty thousand millions. It will be readily seen that itwas fully time to put an end to the system, for the gold "_louis_" oftwenty-five _francs_ in specie had, in February, 1796, as we have seen, become worth 7, 200 _francs_, and, at the latest quotation of all, noless than 15, 000 _francs_ in paper money--that is, one franc in gold wasnominally worth 600 _francs_ in paper. 

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

III. 

The first new expedient of the Directory was to secure a forced loan ofsix hundred million _francs_ from the wealthier classes; but this wasfound fruitless. Ominous it was when persons compelled to take thisloan found for an _assignat_ of one hundred _francs_ only one franc wasallowed. Next a National Bank was proposed; but capitalists were loathto embark in banking while the howls of the mob against all who hadanything especially to do with money resounded in every city. At lastthe Directory bethought themselves of another expedient. This was by nomeans new. It had been fully tried on our continent twice before thattime: and once, since--first, in our colonial period; next, duringour Confederation; lastly, by the "Southern Confederacy" and here, as elsewhere, always in vain. But experience yielded to theory--plainbusiness sense to financial metaphysics. It was determined to issue anew paper which should be "fully secured" and "as good as gold. "

Pursuant to this decision it was decreed that a new paper money "fullysecured and as good as gold" be issued under the name of "_mandats_. " Inorder that these new notes should be "fully secured, " choice public realestate was set apart to an amount fully equal to the nominal value ofthe issue, and any one offering any amount of the _mandats_ could atonce take possession of government lands; the price of the lands to bedetermined by two experts, one named by the government and one by thebuyer, and without the formalities and delays previously established inregard to the purchase of lands with _assignats_. 

Perhaps the most whimsical thing in the whole situation was thefact that the government, pressed as it was by demands of all sorts, continued to issue the old _assignats_ at the same time that it wasdiscrediting them by issuing the new _mandats_. And yet in order to makethe _mandats_ "as good as gold" it was planned by forced loans and othermeans to reduce the quantity of _assignats_ in circulation, so that thevalue of each _assignat_ should be raised to one-thirtieth of the valueof gold, then to make _mandats_ legal tender and to substitute them for_assignats_ at the rate of one for thirty. Never were great expectationsmore cruelly disappointed. Even before the _mandats_ could be issuedfrom 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 percent, 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 in1737; just as it failed under our own Confederation in 1781; just as itfailed under the Southern Confederacy during our Civil War. [72]

To sustain this new currency the government resorted to every methodthat ingenuity could devise. Pamphlets suited to people of everycapacity were published explaining its advantages. Never was there moreskillful puffing. A pamphlet signed "Marchant" and dedicated to "Peopleof Good Faith" was widely circulated, in which Marchant took painsto show the great advantage of the _mandats_ as compared with_assignats_, --how land could be more easily acquired with them; howtheir security was better than with _assignats_; how they could not, byany possibility, sink in values as the _assignats_ had done. But evenbefore 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 byproposing penalties against those who shall speak publicly againstthe _mandats_; Talot thought the penalties ought to be made especiallysevere; and finally it was enacted that any persons "who by theirdiscourse or writing shall decry the _mandats_ shall be condemned to afine 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. " Itwas also decreed that those who refused to receive the _mandats_ shouldbe fined, --the first time, the exact sum which they refuse; the secondtime, ten times as much; and the third time, punished with two years inprison. But here, too, came in the action of those natural laws whichare alike inexorable in all countries. This attempt proved futile inFrance just as it had proved futile less than twenty years before inAmerica. No enactments could stop the downward tendency of this newpaper "fully secured, " "as good as gold"; the laws that finally governfinance are not made in conventions or congresses. [74]

From time to time various new financial juggles were tried, some of themingenious, most of them drastic. It was decreed that all _assignats_above the value of one hundred _francs_ should cease to circulate afterthe beginning of June, 1796. But this only served to destroy thelast vestige of, confidence in government notes of any kind. Anotherexpedient was seen in the decree that paper money should be made toaccord with a natural and immutable standard of value and that one francin paper should thenceforth be worth ten pounds of wheat. This alsofailed. On July 16th another decree seemed to show that the authoritiesdespaired of regulating the existing currency and it was decreed thatall paper, whether _mandats_ or _assignats_, should be taken at itsreal value, and that bargains might be made in whatever currency peoplechose. The real value of the _mandats_ speedily sank to about two percent of their nominal value and the only effect of this legislationseemed to be that both _assignats_ and _mandats_ went still lower. Thenfrom February 4 to February 14, 1797, came decrees and orders that theengraving apparatus for the _mandats_ should be destroyed as that forthe _assignats_ had been, that neither _assignats_ nor _mandats_ shouldlonger be a legal tender and that old debts to the state might be paidfor a time with government paper at the rate of one per cent of theirface value. [75] Then, less than three months later, it was decreed thatthe twenty-one billions of _assignats_ still in circulation should beannulled. Finally, on September 30, 1797, as the culmination of theseand various other experiments and expedients, came an order of theDirectory that the national debts should be paid two-thirds in bondswhich might be used in purchasing confiscated real estate, and theremaining "Consolidated Third, " as it was called, was to be placed onthe "Great Book" of the national debt to be paid thenceforth as thegovernment should think best. 

As to the bonds which the creditors of the nation were thus forced totake, they sank rapidly, as the _assignats_ and _mandats_ had done, evento three per cent of their value. As to the "Consolidated Third, " thatwas largely paid, until the coming of Bonaparte, in paper money whichsank 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 hundredmillions of _mandats_ went into the common heap of refuse with theprevious forty-five thousand millions of _assignats_: the nation ingeneral, rich and poor alike, was plunged into financial ruin from oneend to the other. 

On the prices charged for articles of ordinary use light is thrown byextracts 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 withthose which were reached before the close of that year and during theyear 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 bementioned a manufacturer of hardware who, having retired from businessin 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 anda 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 numberof men like him, had been skillful enough to become millionaires, whiletheir dupes, who had clamored for issues of paper money, had becomepaupers. 

The luxury and extravagance of the currency gamblers and their familiesform one of the most significant features in any picture of the socialcondition of that period. [77]

A few years before this the leading women in French society showed anobility of character and a simplicity in dress worthy of Roman matrons. Of these were Madame Boland and Madame Desmoulins; but now all waschanged. At the head of society stood Madame Tallien and others likeher, wild in extravagance, daily seeking new refinements in luxury, anddemanding of their husbands and lovers vast sums to array them and tofeed their whims. If such sums could not be obtained honestly they mustbe had dishonestly. The more closely one examines that period, the moreclearly he sees that the pictures, given by Thibaudeau and Challamel andDe Goncourt are not at all exaggerated. [78]

The contrast between these gay creatures of the Directory period and thepeople at large was striking. Indeed much as the vast majority of thewealthy classes suffered from impoverishment, the laboring classes, salaried employees of all sorts, and people of fixed income and of smallmeans, especially in the cities, underwent yet greater distress. Thesewere found, as a rule, to subsist mainly on daily government rations ofbread at the rate of one pound per person. This was frequently unfitfor food and was distributed to long lines of people, men, women andchildren, who were at times obliged to wait their turn even from dawnto dusk. The very rich could, by various means, especially by bribery, obtain better bread, but only at enormous cost. In May, 1796, the marketprice of good bread was, in paper, 80 _francs_ (16 dollars) per poundand a little later provisions could not be bought for paper money at anyprice. [79]

And here it may be worth mentioning that there was another financialtrouble especially vexatious. While, as we have seen, such enormoussums, rising from twenty to forty thousand millions of _francs_ inpaper, were put in circulation by the successive governments of theRevolution, enormous sums had been set afloat in counterfeits bycriminals and by the enemies of France. These came not only fromvarious parts of the French Republic but from nearly all the surroundingnations, the main source being London. Thence it was that Count Josephde Puisaye sent off cargoes of false paper, excellently engraved andprinted, through ports in Brittany and other disaffected parts ofFrance. One seizure by General Hoche was declared by him to exceed innominal value ten thousand millions of _francs_. With the exception ofa few of these issues, detection was exceedingly difficult, even forexperts; for the vast majority of the people it was impossible. 

Nor was this all. At various times the insurgent royalists in La Vendeeand elsewhere put _their_ presses also in operation, issuing notesbearing the Bourbon arms, --the _fleur-de-lis_, the portrait of theDauphin (as Louis XVII) with the magic legend "_De Par le Roi_, " andlarge 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 fundsby still another "forced loan, " and other discredited measures, butwhen all was over with paper money, specie began to reappear--first insufficient sums to do the small amount of business which remained afterthe collapse. Then as the business demand increased, the amount ofspecie flowed in from the world at large to meet it and the nationgradually recovered from that long paper-money debauch. 

Thibaudeau, a very thoughtful observer, tells us in his Memoirs thatgreat fears were felt as to a want of circulating medium between thetime when paper should go out and coin should come in; but that nosuch want was severely felt--that coin came in gradually as it waswanted. [81]

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

But though there soon came a degree of prosperity--as compared with thedistress during the paper-money orgy, convalescence was slow. The acutesuffering from the wreck and rain brought by _assignats_, _mandats_ andother paper currency in process of repudiation lasted nearly ten years, but the period of recovery lasted longer than the generation whichfollowed. It required fully forty years to bring capital, industry, commerce and credit up to their condition when the Revolution began, anddemanded a "man on horseback, " who established monarchy on the ruins ofthe Republic and thew away millions of lives for the Empire, to be addedto the millions which had been sacrificed by the Revolution. [83]

Such, briefly sketched in its leading features, is the history of themost skillful, vigorous and persistent attempt ever made to substitutefor natural laws in finance the ability of legislative bodies, and, fora standard of value recognized throughout the world, a national standarddevised by theorists and manipulated by schemers. Every other attemptof the same kind in human history, under whatever circumstances, hasreached similar results in kind if not in degree; all of them show theexistence of financial laws as real in their operation as those whichhold the planets in their courses. [84]

I have now presented this history in its chronological order--the orderof 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 andcareful issues of paper we saw, as an immediate result, improvement andactivity in business. Then arose the clamor for more paper money. Atfirst, new issues were made with great difficulty; but, the dyke oncebroken, the current of irredeemable currency poured through; and, thebreach thus enlarging, this currency was soon swollen beyond control. It was urged on by speculators for a rise in values; by demagogues whopersuaded the mob that a nation, by its simple fiat, could stamp realvalue to any amount upon valueless objects. As a natural consequence agreat debtor class grew rapidly, and this class gave its influence todepreciate more and more the currency in which its debts were to bepaid. [85]

The government now began, and continued by spasms to grind out stillmore paper; commerce was at first stimulated by the difference inexchange; but this cause soon ceased to operate, and commerce, havingbeen stimulated unhealthfully, wasted away. 

Manufactures at first received a great impulse; but, ere long, thisoverproduction and overstimulus proved as fatal to them as to commerce. From time to time there was a revival of hope caused by an apparentrevival of business; but this revival of business was at last seen tobe caused more and more by the desire of far-seeing and cunning men ofaffairs to exchange paper money for objects of permanent value. Asto the people at large, the classes living on fixed incomes and smallsalaries felt the pressure first, as soon as the purchasing power oftheir fixed incomes was reduced. Soon the great class living on wagesfelt it even more sadly. 

Prices of the necessities of life increased: merchants were obliged toincrease them, not only to cover depreciation of their merchandise, butalso to cover their risk of loss from fluctuation; and, while the pricesof products thus rose, wages, which had at first gone up, underthe general stimulus, lagged behind. Under the universal doubt anddiscouragement, commerce and manufactures were checked or destroyed. As a consequence the demand for labor was diminished; laboring men werethrown out of employment, and, under the operation of the simplestlaw of supply and demand, the price of labor--the daily wages of thelaboring class--went down until, at a time when prices of food, clothingand various articles of consumption were enormous, wages were nearly aslow as at the time preceding the first issue of irredeemable currency. 

The mercantile classes at first thought themselves exempt from thegeneral misfortune. They were delighted at the apparent advance in thevalue of the goods upon their shelves. But they soon found that, as theyincreased prices to cover the inflation of currency and the riskfrom fluctuation and uncertainty, purchases became less in amountand payments less sure; a feeling of insecurity spread throughout thecountry; enterprise was deadened and stagnation followed. 

New issues of paper were then clamored for as more drams are demanded bya drunkard. New issues only increased the evil; capitalists were all themore reluctant to embark their money on such a sea of doubt. Workmen ofall sorts were more and more thrown out of employment. Issue after issueof currency came; but no relief resulted save a momentary stimulus, which aggravated the disease. The most ingenious evasions of naturallaws in finance which the most subtle theorists could contrive weretried--all in vain; the most brilliant substitutes for those laws weretried; "self-regulating" schemes, "interconverting" schemes--allequally vain. [86] All thoughtful men had lost confidence. All men were_waiting_; stagnation became worse and worse. At last came the collapseand then a return, by a fearful shock, to a state of things whichpresented 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 becamea game of chance, and all business men, gamblers. In city centers came aquick growth of stock-jobbers and speculators; and these set a debasingfashion in business which spread to the remotest parts of the country. Instead of satisfaction with legitimate profits, came a passion forinordinate gains. Then, too, as values became more and more uncertain, there was no longer any motive for care or economy, but every motive forimmediate expenditure and present enjoyment. So came upon the nationthe _obliteration of thrift_. In this mania for yielding to presentenjoyment rather than providing for future comfort were the seeds ofnew growths of wretchedness: luxury, senseless and extravagant, set in:this, too, spread as a fashion. To feed it, there came cheatery inthe nation at large and corruption among officials and persons holdingtrusts. While men set such fashions in private and official business, women set fashions of extravagance in dress and living that added to theincentives to corruption. Faith in moral considerations, or even ingood impulses, yielded to general distrust. National honor was thoughta fiction cherished only by hypocrites. Patriotism was eaten out bycynicism. 

Thus was the history of France logically developed in obedience tonatural laws; such has, to a greater or less degree, always been theresult of irredeemable paper, created according to the whim or interestof legislative assemblies rather than based upon standards of valuepermanent in their nature and agreed upon throughout the entire world. Such, we may fairly expect, will always be the result of them untilthe fiat of the Almighty shall evolve laws in the universe radicallydifferent from those which at present obtain. [87]

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

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

It progressed according to a law in social physics which we may callthe "_law of accelerating issue and depreciation. _" It was comparativelyeasy to refrain from the first issue; it was exceedingly difficult torefrain from the second; to refrain from the third and those followingwas practically impossible. 

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

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

But this history would be incomplete without a brief sequel, showing howthat great genius profited by all his experience. When Bonaparte tookthe consulship the condition of fiscal affairs was appalling. Thegovernment was bankrupt; an immense debt was unpaid. The furthercollection of taxes seemed impossible; the assessments were in hopelessconfusion. War was going on in the East, on the Rhine, and in Italy, andcivil war, in La Vendée. All the armies had long been unpaid, and thelargest loan that could for the moment be effected was for a sum hardlymeeting the expenses of the government for a single day. At the firstcabinet council Bonaparte was asked what he intended to do. He replied, "I will pay cash or pay nothing. " From this time he conducted all hisoperations on this basis. He arranged the assessments, funded the debt, and made payments in cash; and from this time--during all the campaignsof Marengo, Austerlitz, Jena, Eylau, Friedland, down to the Peace ofTilsit in 1807--there was but one suspension of specie payment, and thisonly for a few days. When the first great European coalition was formedagainst the Empire, Napoleon was hard pressed financially, and it wasproposed to resort to paper money; but he wrote to his minister, "WhileI live I will never resort to irredeemable paper. " He never did, andFrance, under this determination, commanded all the gold she needed. When Waterloo came, with the invasion of the Allies, with war on herown soil, with a change of dynasty, and with heavy expenses for war andindemnities, France, on a specie basis, experienced no severe financialdistress. 

If we glance at the financial history of France during theFranco-Prussian War and the Communist struggle, in which a far moreserious pressure was brought upon French finances than our own recentCivil War put upon American finance, and yet with no national stagnationor distress, but with a steady progress in prosperity, we shall seestill more clearly the advantage of meeting a financial crisis in anhonest and straightforward way, and by methods sanctioned by the world'smost 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 toponder. 

NOTES

Note: The White Collection at the Cornell University library mentionedin 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 inexistence in the city of New York at the time of the French experimentwith fiat money. 

THE BANK OF NEW YORK AND TRUST COMPANY, which celebrates its one-hundredand fiftieth anniversary in March, 1934, considers it a privilege tobe able to distribute some copies of this scholarly article of the lateAndrew D. White. The article emphasizes the fact that the use of fiatmoney in France was in its beginning a sincere effort on the part ofintelligent members of the National Assembly to stem the tide of miseryand wretchedness which had brought about the Revolution in 1789. But thearticle also shows clearly that once started on a small scale, it becameutterly impossible to control the currency inflation and that after someslight indications of improvement in conditions, the situation went frombad to worse. In the long run, those most injured were the people whomit was most desired to help--the laborer, the wage earner and thosewhose 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 eventsin France that followed the experiment with fiat money is intenselyinteresting and well Worth the attention of every thinking person in theUnited States of 1933. 

FOOTNOTES:

[Footnote 1: A paper read before a meeting of Senators and Members ofthe 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 thattime 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 Révolution Française, " vol. Iii, pp. 364, 365, 404. For the wild utterances of Marat throughout this wholehistory, see the full set of his "L'ami du peuple" in the PresidentWhite Collection of the Cornell University. For Bergasse's pamphlet anda mass of similar publications, see the same collection. For the effectproduced by them, see Challamel, "Les Français sous la Révolution";also De Goncourt, "La Société Française pendant la Révolution, " &c. ]

For the Report referred to, see Levasseur, "Histoire des classesouvriès et de l'industrie en France de 1789 à 1870, " Paris, 1903, vol. I. , chap. 6. Levasseur (vol. 1, p. 120), a very strong conservative insuch estimates, sets the total value of church property at two thousandmillions; other authorities put it as high as twice that sum. Seeespecially Taine, liv. Ii, ch. I. , who gives the valuation as "aboutfour milliards. " Sybel, "Gesch. Der Revolutionszeit, " gives it as twomilliards and Briand, "La séparation" &c. , agrees with him. See also DeNerve, "Finances Françaises, " vol. Ii, pp. 236-240; also Alison, "History of Europe, " vol. I. ]

[Footnote 6: For striking pictures of this feeling among the youngergeneration of Frenchmen, see Challamel, "Sur la Révolution, " p. 305. For general history of John Law's paper money, see Henri Martin, "Histoire de France"; also Blanqui, "Histoire de l'économie politique, "vol. Ii, pp. 65-87; also Senior on "Paper Money, " sec. Iii, Pt. I, alsoThiers, "Histoire de Law"; also Levasseur, op. Cit. Liv. I. , chap. VI. Several specimens of John Law's paper currency are to be found in theWhite Collection in the Library of Cornell University, --some, numberedwith 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, afterall, not so well secured as John Law's money, see Storch, "EconomiePolitique, " vol. Iv, p. 160. ]

[Footnote 8: For specimens of this first issue and of nearly every otherissue during the French Revolution, see the extensive collection oforiginals in the Cornell University Library. For a virtually completecollection of photographic copies, see Dewamin, "Cent ans denumismatique française, " vol. I, passim. ]

[Footnote 9: See "Addresse de l'Assemblée 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 hisletter to Cerutti, in a leading article of the "Moniteur"; also"Mèmoires do Mirabeau, " vol. Vii, pp. 23, 24 and elsewhere. For hispungent 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 opération, 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 Siécle, " vol. Viii, pp. 84-87; alsoThiers and Mignet. ]

[Footnote 19: See Hatin, Histoire de la Presse en France, vols. V andvi. ]

[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 ouvrières, " 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 withUnreason, " article on Turgot, pp. 169, et seq. ]

[Footnote 28: See De Goncourt, "Société française, " for otherexplanations; "Les Révolutions de Paris, " vol. Ii, p. 216; Challamel, "Les Français sous la Révolution"; Senior, "On Some Effects of PaperMoney, " p. 82; Buchez and Roux, "Histoire Parlementaire, " etc. , vol. X, p. 216; Aulard, "Paris pendant la Révolution thermidorienne, " _passim_, and especially "Rapport du bureau de surveillance, " vol. Ii, pp. 562, etseq. (Dec. 4-24, 1795. )]

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

[Footnote 30: See De Goncourt, "Société Française, " 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 firststimulated manufactures and commerce in Austria and afterward ruinedthem, see Storch's "Economie politique, " vol. Iv, p. 223, note; and forthe same effect produced by the same causes in Russia, see ibid. , end ofvol. Iv. For the same effects in America, see Sumner's "History ofAmerican Currency. " For general statement of effect of inconvertibleissues on foreign exchanges see McLeod on "Banking, " p. 186. ]

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

[Footnote 34: See "Extrait du registre des délibérations de la sectionde la bibliothèque, " May 3, 1791, pp. 4, 5. ]

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

[Footnote 36: For general account, see Thiers' "Révolution, " chap. Xiv;also Lacretelle, vol. Viii, p. 109; also "Memoirs of Mallet du Pan. " Fora good account of the intrigues between the court and Mirabeau and ofthe prices paid him, see Reeve, "Democracy and Monarchy in France, " vol. I, pp. 213-220. For a very striking caricature published after the ironchest in the Tuileries was opened and the evidences of bribery ofMirabeau fully revealed, see Challamel, "Musée, " etc. Vol. I, p. 341, is represented as a skeleton sitting on a pile of letters, holding theFrench 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 thepurchasing power of the _assignats_, see Caron, "Tableaux deDépréciation 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 September15, 1793; also Prudhomme's "Révolutions de Paris. " For arguments ofmuch the same tenor, see vast numbers of pamphlets, newspaper articlesand speeches during the "Greenback Craze, "--and the craze for unlimitedcoinage of silver, --in the United States. ]

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

[Footnote 41: Von Sybel, vol. I, pp. 509, 510, 515; also VilleneuveBargemont, "Histoire de l'Economie Politique, " vol. Ii, p. 213. ]

[Footnote 42: As to the purchasing power of money at that time, seeArthur Young, "Travels in France during the Years 1787, 1788 and 1789. "For notices of the small currency with examples of satirical verseswritten regarding it, see Challamel, "Les français sous laRévolution, " pp. 307, 308. See also Mercier, "Le Nouveau Paris, "edition of 1800, chapter ccv. , entitled "Parchemin Monnaie. " A series ofthese petty notes will be found in the White collection of the CornellUniversity Library. They are very dirty and much worn, but being printedon 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 reasonsfor 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 theWhite Collection in the Library of Cornell University. ]

[Footnote 47: For details of these transactions, see Levasseur, asabove, vol. I, chap. 6, pp. 181, et seq. Original specimens of thesenotes, bearing the portrait of Louis XVI will be found in the CornellUniversity Library (White Collection) and for the whole series perfectlyphotographed in the same collection, Dewarmin, "Cent ans de numismatiquefrançaise, " vol. I, pp. 143-165. ]

[Footnote 48: For statements showing the distress and disorder thatforced 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 inthe Cornell Library. ]

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

[Footnote 52: See Levasseur, as above, vol. I, p. 186. For an argumentto show that the Convention was led into this Draconian legislation, notby necessity, but by its despotic tendencies, see Von Sybel's "Historyof the French Revolution, " vol. Iii, pp. 11, 12. For general statementsof theories underlying the "_Maximum_, " see Thiers; for a veryinteresting picture, by an eye-witness, of the absurdities and miseriesit caused, see Mercier, "Nouveau Paris, " edition of 1800, chapter XLIV. ]

[Footnote 53: For a summary of the report of the Committee, with list ofarticles embraced under it, and for various interesting details, seeVilleneuve Bargemont, "Histoire de l'Economie Politique, " vol. Ii, pp. 213-239; also Levasseur, as above. For curious examples of severepenalties for very slight infringements on the law on the subject, seeLouis Blanc, "Histoire de la Révolution française, " tome x, p. 144. For Louis XIVth's claim see "Memoirs of Louis XIV for the Instruction ofthe Dauphin. "]

For a simple exposition of the way in which the exercise of this powerbecame simply confiscation of all private property in France, see MalletDu 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 showingthe superiority of the French _assignats_ to the old AmericanContinental currency, See his "Histoire de la Révolution française, "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, "Tableauxde la dépréciation de papier monnaie dans le department de la Seine. "]

[Footnote 59: For the example of Metz and other authorities, seeLevasseur, 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 tocompel farmers and merchants, see Senior, Lectures on "Results of PaperMoney, " pp. 86, 87. ]

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

[Footnote 63: See Von Sybel, vol. Iv, p. 330; also tables ofdepreciation in "Moniteur"; also official reports in the WhiteCollection; also Caron's "Tables, " etc. ]

[Footnote 64: For a lifelike sketch of the way in which these exchangesof _assignats_ for valuable property went on at periods of the rapiddepreciation of paper, see Challamel, "Les français sous laRévolution, " p. 309; also Say, "Economic Politique. "]

[Footnote 65: For a very complete table of the depreciation from day today, see "Supplement to the Moniteur" of October 2, 1797; also Caron, asabove. For the market prices of the _louis d'or_ at the first of everymonth, as the collapse approached, see Montgaillard. See also "OfficialLists" in the White Collection. For a table showing the steady rise ofthe franc in gold during a single week, from 251 to 280 _francs_, seeDewarmin, as above, vol. I, p. 136. ]

[Footnote 66: See "Mèmoires de Thibaudeau, " vol. Ii, p. 26, alsoMercier, "Lo Nouveau Paris, " vol. Ii, p. 90; for curious example of thescales of depreciation see the White Collection. See also extended tableof 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, seeSumner, "History of American Currency, " p. 47. ]

[Footnote 68: See Villeneuve Bargemont, "Histoire de l'économiepolitique, " vol. Ii, p. 229. ]

[Footnote 69: See Von Sybel, vol. Iv, pp. 337, 338. See also forconfirmation Challamel, "Histoire Musée, " vol. Ii, p. 179. For athoughtful statement of the reasons why such paper was not invested inlands by men of moderate means, and workingmen, see Mill, "PoliticalEconomy, " vol. Ii, pp. 81, 82. ]

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

[Footnote 71: See especially Levasseur, "Histoire des classesouvrières, " etc. Vol. I, pp. 219, 230 and elsewhere; also De Nervo, "Finance française, " p. 280; also Stourm, as already cited. The exactamount of _assignats_ in circulation at the final suppression is givenby 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 sametime, 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 in1737, see Summer, pp. 27-31; for their failure in 1781, see Morse, "Lifeof Alexander Hamilton, " vol. I, pp. 86, 87. For similar failure inAustria, see Summer, p. 314. ]

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

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

[Footnote 75: See De Nervo, "Finances françaises, " p. 282; alsoLevasseur, vol. I, p. 236 et seq. ]

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

[Footnote 77: Among the many striking accounts of the debasing effectsof "inflation" upon France under the Directory perhaps the best is thatof Lacretelle, vol. Xiii, pp. 32-36. For similar effect, produced by thesame cause in our own country in 1819, see statement from Niles'"Register, " in Sumner, p. 80. For the jumble of families reduced tobeggary with families lifted into sudden wealth and for the mass offolly and misery thus mingled, see Levassour, vol. I, p. 237. ]

[Footnote 78: For Madame Tallien and luxury of the stock-gamblerclasses, see Challamel, "Les français sous la Révolution, " pp. 30, 33;also De Goncourt, "Les français sous le Directoire. " Regarding theoutburst of vice in Paris and the demoralization of the police, seeLevasseur, as above. ]

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

[Footnote 80: For specimens of counterfeit _assignats_, see the WhiteCollection in the Cornell University Library, but for the great seriesof various issues of them in fac-simile, also for detective warnings andattempted descriptions of many varieties of them, and for the history oftheir Issue, see especially Dewarmin, vol. I, pp. 152-161. Forphotographic copies of Royalist _assignats_, etc. , see also Dewarmin, ibid. , pp. 192-197, etc. For a photograph of probably the last of theRoyalist notes ever issued, bearing the words "Pro Deo, pro Rege, proPatria" and "Armée Catholique et Royale" with the date 1799, and forthe 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 andDenmark, see Storch, "Economie Politique, " vol. Iv; for similar effectsin the United States, see Gouge, "Paper Money and Banking in the UnitedStates, " also Summer, "History of American Currency. " For working out ofthe same principles in England, depicted in a masterly way, seeMacaulay, "History of England, " chap. Xxi; and for curious exhibition ofthe same causes producing same results in ancient Greece, see a curiousquotation by Macaulay in same chapter. ]

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

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

[Footnote 87: For similar effect of inflated currency in enervating andundermining trade, husbandry, manufactures and morals in our owncountry, see Daniel Webster, cited in Sumner, pp. 45-50. For similareffects in other countries, see Senior, Storch, Macaulay and othersalready cited. ]

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