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+The Project Gutenberg EBook of Fiat Money Inflation in France
+by Andrew Dickson White
+
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+Title: Fiat Money Inflation in France
+
+Author: Andrew Dickson White
+
+Release Date: November, 2004  [EBook #6949]
+[This file was first posted on February 17, 2003]
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+Edition: 10
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+
+*** START OF THE PROJECT GUTENBERG EBOOK, FIAT MONEY INFLATION IN FRANCE ***
+
+
+
+
+This eBook was produced by Gordon Keener.
+
+
+
+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;
+Sometime United States Minister to Russia and Ambassador to Germany;
+Author of "A History of the Warfare of Science with Theology," etc.
+
+
+INTRODUCTION
+
+As far back as just before our Civil War I made, in France and
+elsewhere, a large collection of documents which had appeared during
+the French Revolution, including newspapers, reports, speeches,
+pamphlets, illustrative material of every sort, and, especially,
+specimens of nearly all the Revolutionary issues of paper money,--from
+notes of ten thousand _livres_ to those of one _sou_.
+
+Upon this material, mainly, was based a course of lectures then given
+to my students, first at the University of Michigan and later at
+Cornell University, and among these lectures, one on "Paper Money
+Inflation in France."
+
+This was given simply because it showed one important line of facts in
+that great struggle; and I recall, as if it were yesterday, my feeling
+of regret at being obliged to bestow so much care and labor upon a
+subject to all appearance so utterly devoid of practical value.  I am
+sure that it never occurred, either to my Michigan students or to
+myself, that it could ever have any bearing on our own country.  It
+certainly never entered into our minds that any such folly as that
+exhibited in those French documents of the eighteenth century could
+ever find supporters in the United States of the nineteenth.
+
+Some years later, when there began to be demands for large issues of
+paper money in the United States, I wrought some of the facts thus
+collected into a speech in the Senate of the State of New York,
+showing the 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
+audience of Senators and Representatives of both parties in
+Washington.  This I did, and also gave it later before an assemblage
+of men of business at the Union League Club in New York.
+
+Various editions of the paper were afterward published, among them,
+two or three for campaign purposes, in the hope that they might be of
+use in showing to what folly, cruelty, wrong and rain the passion for
+"fiat money" may lead.
+
+Other editions were issued at a later period, in view of the principle
+involved in the proposed unlimited coinage of silver in the United
+States, which was, at bottom, the idea which led to that fearful wreck
+of public and private prosperity in France.
+
+For these editions there was an added reason in the fact that the
+utterances of sundry politicians at that time pointed clearly to
+issues of paper money practically unlimited.  These men were logical
+enough to see that it would be inconsistent to stop at the unlimited
+issue of silver dollars which cost really something when they could
+issue unlimited paper dollars which virtually cost nothing.
+
+In thus exhibiting facts which Bishop Butler would have recognized as
+confirming his theory of "The Possible Insanity of States," it is but
+just to acknowledge that the French proposal was vastly more sane than
+that made in our own country.  Those French issues of paper rested not
+merely "on the will of a free people," but on one-third of the entire
+landed property of France; on the very choicest of real property in
+city and country--the confiscated estates of the Church and of the
+fugitive aristocracy--and on the power to use the paper thus issued in
+purchasing this real property at very low prices.
+
+I have taken all pains to be exact, revising the whole paper in the
+light of the most recent publications and giving my authority for
+every important statement, and now leave the whole matter with my
+readers.
+
+At the request of a Canadian friend, who has expressed a strong wish
+that this work be brought down to date, I have again restudied the
+subject in the light of various works which have appeared since my
+earlier research,--especially Levasseur's "Histoire des classes
+ouvrières et de l'industrie en France,"--one of the really great
+books of the twentieth century;--Dewarmin's superb "Cent Ans de
+numismatique Française" and sundry special treatises.  The result has
+been that large additions have been made regarding some important
+topics, and that various other parts of my earlier work have been made
+more clear by better 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, the
+distinguished American scholar, author and diplomatist, for permission
+to print and to circulate privately a small edition of his exceedingly
+valuable account of the great currency-making experiment of the French
+Revolutionary Government.  The work has been revised and considerably
+enlarged by Mr. White for the purpose of the present issue.
+
+The story of "Fiat Money Inflation in France" is one of great interest
+to legislators, to economic students, and to all business and thinking
+men.  It records the most gigantic attempt ever made in the history of
+the world by a government to create an inconvertible paper currency,
+and to maintain its circulation at various levels of value.  It also
+records what is perhaps the greatest of all governmental efforts--with
+the possible exception of Diocletian's--to enact and enforce a legal
+limit of commodity prices.  Every fetter that could hinder the will or
+thwart the wisdom of democracy had been shattered, and in consequence
+every device and expedient that untrammelled power and unrepressed
+optimism could conceive were brought to bear.  But the attempts
+failed.  They left behind them a legacy of moral and material
+desolation and woe, from which one of the most intellectual and
+spirited races of Europe has suffered for a century and a quarter, and
+will continue to suffer until the end of time.  There are limitations
+to the powers of governments and of peoples that inhere in the
+constitution of things, and that neither despotisms nor democracies
+can overcome.
+
+Legislatures are as powerless to abrogate moral and economic laws as
+they are to abrogate physical laws.  They cannot convert wrong into
+right nor divorce effect from cause, either by parliamentary
+majorities, or by unity of supporting public opinion.  The penalties
+of such legislative folly will always be exacted by inexorable time.
+While these propositions may be regarded as mere commonplaces, and
+while they are acknowledged in a general way, they are in effect
+denied by many of the legislative experiments and the tendencies of
+public opinion of the present day.  The story, therefore, of the
+colossal folly of France in the closing part Of the eighteenth century
+and its terrible fruits, is full of instruction for all men who think
+upon the problems of our own time.
+
+From among an almost infinite variety, there are four great and
+fundamental facts that clearly emerge, namely,--
+
+(1) Notwithstanding the fact that the paper currency issued was the
+direct 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 were
+enacted from time to time to maintain its circulation at fixed values,
+there was a steady depreciation in value until it reached zero point
+and culminated in repudiation.  The aggregate of the issues amounted
+to no less than the enormous and unthinkable sum of $9,500,000,000,
+and in the middle of 1797 when public repudiation took place, there
+was no less than $4,200,000,000 in face value of _assignats_ and
+_mandats_ outstanding; the loss, as always, falling mostly upon the
+poor and the ignorant.
+
+(2) In the attempt to maintain fixed values for the paper currency the
+Government became involved in an equally futile attempt to maintain a
+tariff of legal prices for commodities.  Here again penalties of
+fines, of imprisonments and of death were powerless to accomplish the
+end in view.
+
+(3) An wholesale demoralisation of society took place under which
+thrift, integrity, humanity, and every principle of morality were
+thrown into the welter of seething chaos and cruelty.
+
+(4) The real estate upon which the paper currency was secured
+represented confiscations by the State of the lands of the Church and
+of the Emigrant Noblemen.  These lands were appraised, according to
+Mr.  White's narrative and other authorities, at $1,000,000,000.  Here
+was a straight addition to the State's resources of $1,000,000,000.
+It is ominously significant that within one hundred years under the
+"Peace of Frankfort" signed on the 10th May, 1871, the French nation
+agreed to pay a war indemnity to victorious Germany of exactly the
+same sum, namely, $1,000,000,000 in addition to the surrender of the
+province of Alsace and a considerable part of Lorraine.  The great
+addition to the national wealth, therefore, effected by the immoral
+confiscation of the lands in question disappeared with compound
+territorial interest added under the visitation of relentless
+retribution.
+
+Public opinion in our own country is so far sound on the question of
+currency, but signs are not lacking in some lay quarters of an
+inclination to sanction dangerous experiments.  The doctrine of
+governmental regulation of prices, has, however, made its appearance
+in embryo.  Class dissatisfaction is also on the increase.  The
+confiscation of property rights under legal forms and processes is apt
+to be condoned when directed against unpopular interests and when
+limited to amounts that do not revolt the conscience.  The wild and
+terrible expression given to these insidious principles in the havoc
+of the Revolution should be remembered by all.  Nor should the fact be
+overlooked that, as Mr. White points out on Page 6, the National
+Assembly of France which originated and supported these measures
+contained in its membership the ablest 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
+financial embarrassment: 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 of confidence in business circles; capital had shown its
+proverbial timidity by retiring out of sight as far as possible;
+throughout the land was stagnation.
+
+Statesmanlike measures, careful watching and wise management would,
+doubtless, have ere long led to a return of confidence, a reappearance
+of money and a resumption of business; but these involved patience and
+self-denial, and, thus far in human history, these are the rarest
+products of political wisdom.  Few nations have ever been able to
+exercise these virtues; and France was not then one of these few.[2]
+
+There was a general search for some short road to prosperity: ere long
+the idea was set afloat that the great want of the country was more of
+the circulating medium; and this was speedily followed by calls for an
+issue of paper money.  The Minister of Finance at this period was
+Necker.  In financial ability he was acknowledged as among the great
+bankers of Europe, but his was something more than financial ability:
+he had a deep feeling of patriotism and a high sense of personal
+honor.  The difficulties in his way were great, but he steadily
+endeavored to keep France faithful to those principles in monetary
+affairs which the general experience of modem times had found the only
+path to national safety.  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, proclaimed it 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 joined the cries against Necker,
+picturing him--a man of sterling honesty, who gave up health and
+fortune for the sake of France--as a wretch seeking only to enrich
+himself from the public purse.
+
+Against this tendency toward the issue of irredeemable paper Necker
+contended as best he might.  He knew well to what it always had led,
+even when surrounded by the most skillful guarantees.  Among those who
+struggled to support ideas similar to his was Bergasse, a deputy from
+Lyons, whose pamphlets, then and later, against such issues exerted a
+wider influence, perhaps, than any others: parts of them seem fairly
+inspired.  Any one to-day reading his prophecies of the evils sure to
+follow such a currency would certainly ascribe to him a miraculous
+foresight, were it not so clear that his prophetic power was due
+simply to a knowledge of natural laws revealed by history.  But this
+current in favor of paper money became so strong that an effort was
+made to breast it by a compromise: and during the last months of 1789
+and the first months of 1790 came discussions in the National Assembly
+looking to issues of notes based upon the landed property of the
+Church,--which was to be confiscated for that purpose.  But care was
+to be taken; the issue was 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 to be used in purchasing the Church
+lands; besides this, they were to bear interest and this would tempt
+holders to hoard them.  The Assembly thus held back from issuing
+smaller obligations.
+
+Remembrances of the ruin which had come from the great issues of
+smaller currency at an earlier day were still vivid.  Yet the pressure
+toward a popular currency for universal use grew stronger and
+stronger.  The finance committee of the Assembly reported that "the
+people demand a new circulating medium"; that "the circulation of
+paper money is the best of operations"; that "it is the most free
+because it reposes on the will of the people"; that "it will bind the
+interest of the citizens to the public good."
+
+The report appealed to the patriotism of the French people with the
+following exhortation: "Let us show to Europe that we understand our
+own resources; let us immediately take the broad road to our
+liberation instead of dragging ourselves along the tortuous and
+obscure paths of fragmentary loans."  It concluded by recommending an
+issue of paper money carefully guarded, to the full amount of four
+hundred million _livres_, and the argument was pursued until the
+objection to smaller notes faded from view.  Typical in the debate on
+the whole subject, in its various phases, were the declarations of
+M. Matrineau.  He was loud and long for paper money, his only fear
+being that the Committee had not authorized enough of it; he declared
+that business was stagnant, and that the sole cause was a want of more
+of the circulating medium; that paper money ought to be made a legal
+tender; that the Assembly should rise above prejudices which the
+failures of John Law's paper money had caused, several decades before.
+Like every supporter of irredeemable paper money then or since, he
+seemed to think that the laws of Nature had changed since previous
+disastrous issues.  He said: "Paper money under a despotism is
+dangerous; it favors corruption; but in a nation constitutionally
+governed, which itself takes care in the emission of its notes, which
+determines their number and use, that danger no longer exists."  He
+insisted that John Law's notes at first restored prosperity, but that
+the wretchedness and ruin they caused resulted from their overissue,
+and that such an overissue is possible only under a despotism.[3]
+
+M. de la Rochefoucauld gave his opinion that "the _assignats_ will
+draw specie out of the coffers where it is now hoarded.[4]
+
+On the other hand Cazalès and Maury showed that the result could only
+be disastrous.  Never, perhaps, did a political prophecy meet with
+more exact fulfillment in every line than the terrible picture drawn
+in one of Cazalès' speeches in this debate.  Still the current ran
+stronger and stronger; Petion made a brilliant oration in favor of the
+report, and Necker's influence and experience were gradually worn
+away.
+
+Mingled with the financial argument was a strong political plea.  The
+National Assembly had determined to confiscate the vast real property
+of the French Church,--the pious accumulations of fifteen hundred
+years.  There were princely estates in the country, bishops' palaces
+and conventual buildings in the towns; these formed between one-fourth
+and one-third of the entire real property of France, and amounted in
+value to at least two thousand million _livres_.  By a few sweeping
+strokes all this became the property of the nation.  Never,
+apparently, did a government secure a more solid basis for a great
+financial future.[5]
+
+There were two special reasons why French statesmen desired speedily
+to sell these lands.  First, a financial reason,--to obtain money to
+relieve the government.  Secondly, a political reason,--to get this
+land distributed among the thrifty middle-classes, and so commit them
+to the Revolution 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 been
+proposed, but in notes small as well as large), would give the
+treasury something to pay out immediately, and relieve the national
+necessities; that, having been put into circulation, this paper money
+would stimulate business; that it would give to all capitalists, large
+or small, the means for buying from the nation the ecclesiastical real
+estate, and that from the proceeds of this real estate the nation
+would pay its debts and also obtain new funds for new necessities:
+never was theory more seductive both to financiers and statesmen.
+
+It would be a great mistake to suppose that the statesmen of France,
+or the French people, were ignorant of the dangers in issuing
+irredeemable paper money.  No matter how skillfully the bright side of
+such a currency was 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 well based 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 to the absorption of the means of
+the workingmen and men of small fortunes; how heavily it falls on all
+those living on fixed incomes, salaries or wages; how securely it
+creates on the ruins of the prosperity of all men of meagre means a
+class of debauched speculators, the most injurious class that a nation
+can harbor,--more injurious, indeed, than professional criminals whom
+the law recognizes and can throttle; how it stimulates overproduction
+at first and leaves every industry flaccid afterward; how it breaks
+down thrift and develops political and social immorality.  All this
+France had been thoroughly taught by experience.  Many then living had
+felt the result of such an experiment--the issues of paper money under
+John Law, a man who to this day is acknowledged one of the most
+ingenious financiers the world has ever known; and there were then
+sitting in the National Assembly of France many who owed the poverty
+of their families to those issues of paper.  Hardly a man in the
+country who had not heard those who issued it cursed as the authors of
+the 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
+piece of that old paper money and to declare that it was stained with
+the blood 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
+the character of the men who legislated for France afterward, no
+thoughtful student of history can deny, despite all the arguments and
+sneers of reactionary statesmen and historians, that few more
+keen-sighted legislative bodies have ever met than this first French
+Constitutional Assembly.  In it were such men as Sieyès, Bailly,
+Necker, Mirabeau, Talleyrand, DuPont de Nemours and a multitude of
+others who, in various sciences and in the political world, had
+already shown and were destined afterward to show themselves among the
+strongest and shrewdest men that Europe has yet seen.
+
+But the current toward paper money had become irresistible.  It was
+constantly urged, and with a great show of force, that if any nation
+could safely issue it, France was now that nation; that she was fully
+warned by her severe experience under John Law; that she was now a
+constitutional government, controlled by an enlightened, patriotic
+people,--not, as in the days of the former issues of paper money, an
+absolute monarchy controlled by politicians and adventurers; that she
+was able to secure every _livre_ of her paper money by a virtual
+mortgage on a landed domain vastly greater in value than the entire
+issue; that, with men like Bailly, Mirabeau and Necker at her head,
+she could not commit the financial mistakes and crimes from which
+France had suffered under John Law, the Regent Duke of Orleans and
+Cardinal Dubois.
+
+Oratory prevailed over science and experience.  In April, 1790, came
+the final decree to issue four hundred millions of _livres_ in paper
+money, based upon confiscated property of the Church for its security.
+The deliberations on this first decree and on the bill carrying it
+into effect were most interesting; prominent in the debate being
+Necker, Du Pont de Nemours, Maury, Cazalès, Petion, Bailly and many
+others hardly inferior.  The discussions were certainly very able; no
+person can read them at length in the "Moniteur," nor even in the
+summaries of the parliamentary history, without feeling that various
+modern historians have done wretched injustice to those men who were
+then endeavoring to stand 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 productive real
+estate and bearing interest to the holder at three per cent.  No
+irredeemable currency has ever claimed a more scientific and practical
+guarantee for its goodness and for its proper action on public
+finances.  On the one hand, it had what the world recognized as a most
+practical security,--a mortgage an productive real estate of vastly
+greater value than the issue.  On the other hand, as the notes bore
+interest, there seemed cogent reason for their being withdrawn from
+circulation whenever they became redundant.[7]
+
+As speedily as possible the notes were put into circulation.  Unlike
+those issued in John Law's time, they were engraved in the best style
+of the art.  To stimulate loyalty, the portrait of the king was placed
+in the center; to arouse public spirit, patriotic legends and emblems
+surrounded it; to stimulate public cupidity, the amount of interest
+which the note would yield each day to the holder was printed in the
+margin; and the whole was duly garnished with stamps and signatures to
+show that it was carefully registered and controlled.[8]
+
+To crown its work the National Assembly, to explain the advantages of
+this new currency, issued an address to the French people.  In this
+address it spoke of the nation as "delivered by this grand means from
+all uncertainty and from all ruinous results of the credit system."
+It foretold that this issue "would bring back into the public
+treasury, into commerce and into all branches of industry strength,
+abundance and prosperity."[9]
+
+Some of the arguments in this address are worth recalling, and, among
+them, the following:--"Paper money is without inherent value unless it
+represents some special property.  Without representing some special
+property it is inadmissible in trade to compete with a metallic
+currency, which has a value real and independent of the public action;
+therefore it is that the paper money which has only the public
+authority as its basis has always caused ruin where it has been
+established; that is the reason why the bank notes of 1720, issued by
+John Law, after having caused terrible evils, have left only frightful
+memories.  Therefore it is that the National Assembly has not wished
+to expose you to this danger, but has given this new paper money not
+only a value derived from the national authority but a value real and
+immutable, a value which permits it to sustain advantageously a
+competition with the precious metals themselves."[10]
+
+But the final declaration was, perhaps, the most interesting.  It was
+as follows:--
+
+"These _assignats_, bearing interest as they do, will soon be
+considered better than the coin now hoarded, and will bring it out
+again into circulation."  The king was also induced to issue a
+proclamation recommending that his people receive this new money
+without objection.
+
+All this caused great joy.  Among the various utterances of this
+feeling was the letter of M. Sarot, directed to the editor of the
+Journal of the National Assembly, and scattered through France.
+M. Sarot is hardly able to contain himself as he anticipates the
+prosperity and glory that this issue of paper is to bring to his
+country.  One thing only vexes him, and that is the pamphlet of
+M. Bergasse against the _assignats_; therefore it is after a long
+series of arguments and protestations, in order to give a final proof
+of his confidence in the paper money and his entire skepticism as to
+the evils predicted by Bergasse and others, M. Sarot solemnly lays his
+house, garden and furniture upon the altar of his country and offers
+to sell them for paper money alone.
+
+There were, indeed, some gainsayers.  These especially appeared among
+the clergy, who, naturally, abhorred the confiscation of Church
+property.  Various ecclesiastics made speeches, some of them full of
+pithy and weighty arguments, against the proposed issue of paper, and
+there is preserved a sermon from one priest threatening all persons
+handling the new money with eternal damnation.  But the great majority
+of the French people, who had suffered ecclesiastical oppression so
+long, regarded these utterances as the wriggling of a fish on the
+hook, and enjoyed the sport all the better.[11]
+
+The first result of this issue was apparently all that the most
+sanguine could desire: the treasury was at once greatly relieved; a
+portion of the public debt was paid; creditors were encouraged; credit
+revived; ordinary expenses were met, and, a considerable part of this
+paper money having thus been passed from the government into the hands
+of the people, trade increased and all difficulties seemed to vanish.
+The anxieties of Necker, the prophecies of Maury and Cazalès seemed
+proven utterly futile.  And, indeed, it is quite possible that, if the
+national authorities had stopped with this issue, few of the financial
+evils which afterwards arose would have been severely felt; the four
+hundred millions of paper money then issued would have simply
+discharged the function of a similar amount of specie.  But soon there
+came another result: times grew less easy; by the end of September,
+within five months after the issue of the four hundred millions in
+_assignats_, the government had spent them and was again in
+distress.[12]
+
+The old remedy immediately and naturally recurred to the minds of men.
+Throughout the country began a cry for another issue of paper;
+thoughtful men then began to recall what their fathers had told them
+about the seductive path of paper-money issues in John Law's time, and
+to remember the prophecies that they themselves had heard in the
+debate on the first issue of _assignats_ less than six months before.
+
+At that time the opponents of paper had prophesied that, once on the
+downward path of inflation, the nation could not be restrained and
+that more issues would follow.  The supporters of the first issue had
+asserted that this was a calumny; that the people were now in control
+and that they could and would check these issues whenever they
+desired.
+
+The condition of opinion in the Assembly was, therefore, chaotic: a
+few schemers and dreamers were loud and outspoken for paper money;
+many of the more shallow and easy-going were inclined to yield; the
+more thoughtful endeavored to breast the current.
+
+One man there was who could have withstood the pressure: Mirabeau.  He
+was the popular idol,--the great orator of the Assembly and much more
+than a great orator,--he had carried the nation through some of its
+worst dangers by a boldness almost godlike; in the various conflicts
+he had shown not only oratorical boldness, but amazing foresight.  As
+to his real opinion on an irredeemable currency there can be no doubt.
+It was the opinion which all true statesmen have held, before his time
+and since,--in his own country, in England, in America, in every
+modern civilized nation.  In his letter to Cerutti, written in
+January, 1789, hardly six months before, he had spoken of paper money
+as "A nursery of tyranny, corruption and delusion; a veritable debauch
+of authority in delirium."  In one of his early speeches in the
+National Assembly he had called such money, when Anson covertly
+suggested its issue, "a loan to an armed robber," and said of it:
+"that infamous word, paper money, ought to be banished from our
+language."  In his private letters written at this very time, which
+were revealed at a later period, he showed that he was fully aware of
+the dangers of inflation.  But he yielded to the pressure: partly
+because he thought it important to sell the government lands rapidly
+to the people, and so develop speedily a large class of small
+landholders pledged to stand by the government which gave them their
+titles; partly, doubtless, from a love of immediate rather than of
+remote applause; and, generally, in a vague hope that the severe,
+inexorable laws of finance which had brought heavy punishments upon
+governments emitting an irredeemable currency in other lands, at other
+times, might in some way at this time, be warded off from France.[13]
+
+The question was brought up by Montesquieu's report on the 27th of
+August, 1790.  This report favored, with evident reluctance, an
+additional issue of paper.  It went on to declare that the original
+issue of four hundred millions, though opposed at the beginning, had
+proved successful; 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_, but
+that he now dared urge it; that experience had shown the issue of
+paper money most serviceable; that the report proved the first issue
+of _assignats_ a success; that public affairs had come out of
+distress; that ruin had been averted and credit established.  He then
+argued that there was a difference between paper money of the recent
+issue and that from which the nation had suffered so much in John
+Law's time; he declared that the French nation had now become
+enlightened and he added, "Deceptive subtleties can no longer mislead
+patriots and men of sense in this matter."  He then went on to say:
+"We must accomplish that which we have begun," and declared that there
+must be one more large issue of paper, guaranteed by the national
+lands and by the good faith of the French nation.  To show how
+practical the system was he insisted that just as soon as paper money
+should become too abundant it would be absorbed in rapid purchases of
+national lands; and he made a very striking comparison between this
+self- adjusting, self-converting system and the rains descending in
+showers upon the earth, then in swelling rivers discharged into the
+sea, then drawn up in vapor and finally scattered over the earth again
+in rapidly fertilizing showers.  He predicted that the members would
+be surprised at the astonishing success of 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 has
+generally done.  Toward the close, in a burst of eloquence, he
+suggested that _assignats_ be created to an amount sufficient to cover
+the national debt, and that all the national lands be exposed for sale
+immediately, predicting that thus prosperity would return to the
+nation and that an classes would find this additional issue of paper
+money a blessing.[15]
+
+This speech was frequently interrupted by applause; a unanimous vote
+ordered it printed, and copies were spread throughout France.  The
+impulse given by it permeated all subsequent discussion; Gouy arose
+and proposed to liquidate the national debt of twenty-four hundred
+millions,--to use his own words--"by one single operation, grand,
+simple, magnificent."[16] This "operation" was to be the emission of
+twenty-four hundred millions in legal tender notes, and a law that
+specie should not be accepted in purchasing national lands.  His
+demagogy bloomed forth magnificently.  He advocated an appeal to the
+people, who, to use his flattering expression, "ought alone to give
+the law in a matter so interesting."  The newspapers of the period, in
+reporting his speech, noted it with the very significant remark, "This
+discourse was loudly applauded."
+
+To him replied Brillat-Savarin.  He called attention to the
+depreciation of _assignats_ already felt.  He tried to make the
+Assembly see that natural laws work as inexorably in France as
+elsewhere; he predicted that if this new issue were made there would
+come a depreciation of thirty per cent.  Singular, that the man who so
+fearlessly stood against this tide of unreason has left to the world
+simply a reputation as the most brilliant cook that ever existed!  He
+was followed by the Abbe Goutes, who declared,--what seems grotesque
+to those who have read the history of an irredeemable paper currency
+in any country--that new issues of paper money "will supply a
+circulating medium which will protect 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 all
+times.  He did not recognize the fact that the nation was entering a
+great revolution, but he could and did see that, come what might,
+there were simple principles of finance which must be adhered to.
+Most earnestly, therefore, he endeavored to dissuade the Assembly from
+the proposed issue; suggesting that other means could be found for
+accomplishing the result, and he predicted terrible evils.  But the
+current was running too fast.  The only result was that Necker was
+spurned as a man of the past; he sent in his resignation and left
+France forever.[18] The paper-money demagogues shouted for joy at his
+departure; their chorus rang through the journalism of the time.  No
+words could express their contempt for a man who was unable to see the
+advantages of filling the treasury with the issues of a printing
+press.  Marat, Hébert, Camille Desmoulins and the whole mass of
+demagogues so soon 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
+down into small money.  Le Brun attacked the whole scheme in the
+Assembly, as he had done in the Committee, declaring that the
+proposal, instead of relieving the nation, would wreck it.  The papers
+of the time very significantly say that at this there arose many
+murmurs.  Chabroud came to the rescue.  He said that the issue of
+_assignats_ would relieve the distress of the people and he presented
+very neatly the new theory of paper money and its basis in the
+following words: "The earth is the source of value; you cannot
+distribute the earth in a circulating value, but this paper becomes
+representative of that value and it is evident that the creditors of
+the nation will not be injured by taking it."  On the other hand,
+appeared in the leading paper, the "Moniteur," a very thoughtful
+article against paper money, which sums up all by saying, "It is,
+then, evident that all paper which cannot, at the will of the bearer,
+be converted into specie cannot discharge the functions of money."
+This article goes on to cite Mirabeau's former opinion in his letter
+to Cerutti, published in 1789,--the famous opinion of paper money as
+"a nursery of tyranny, corruption and delusion; a veritable debauch of
+authority in delirium."  Lablache, in the Assembly, quoted a saying
+that "paper money is the emetic of great states."[20]
+
+Boutidoux, resorting to phrasemaking, called the _assignats_ _"un
+papier terre,"_ or "land converted into paper."  Boislandry answered
+vigorously and foretold evil results.  Pamphlets continued to be
+issued,--among them, one so pungent that it was brought into the
+Assembly and read there,--the truth which it presented with great
+clearness being simply that doubling the quantity of money or
+substitutes for money in a nation simply increases prices, disturbs
+values, alarms capital, diminishes legitimate enterprise, and so
+decreases the demand both for products and for labor; that the only
+persons to be helped by it are the rich who have large debts to pay.
+This pamphlet was signed "A Friend of the People," and was received
+with great applause by the thoughtful minority in the Assembly.  Du
+Pont de Nemours, who had stood by Necker in the debate on the first
+issue of _assignats_, arose, avowed the pamphlet to be his, and said
+sturdily that he had always voted against the emission of irredeemable
+paper and always would.[21]
+
+Far more important than any other argument against inflation was the
+speech of Talleyrand.  He had been among the boldest and most radical
+French statesmen.  He it was,--a former bishop,--who, more than any
+other, had carried the extreme measure of taking into the possession
+of the nation the great landed estates of the, Church, and he had
+supported the first issue of four hundred millions.  But he now
+adopted a judicial tone--attempted to show to the Assembly the very
+simple truth that the effect of a second issue of _assignats_ may be
+different from that of the first; that the first was evidently needed;
+that the second may be as injurious as the first was useful.  He
+exhibited various weak points in the inflation fallacies and presented
+forcibly the trite truth that no laws and no decrees can keep large
+issues of irredeemable paper at par with specie.
+
+In his speech occur these words: "You can, indeed, arrange it so that
+the people shall be forced to take a thousand _livres_ in paper for a
+thousand _livres_ in specie; but you can never arrange it so that a
+man shall be obliged to give a thousand _livres_ in specie for a
+thousand _livres_ in paper,--in that fact is embedded the entire
+question; and on account of that fact the whole system fails."[22]
+
+The nation at large now began to take part in the debate; thoughtful
+men saw that here was the turning Point between good and evil, that
+the nation stood at the parting of the ways.  Most of the great
+commercial cities bestirred themselves and sent up remonstrances
+against the new emission,--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
+of a patriotic Citizen on the issue of _Assignats_," in which he gave
+many specious reasons of the why the _assignats_ could not be
+depressed, and spoke of the argument against them as "vile clamors of
+people bribed to affect public opinion."  He said to the National
+Assembly, "If it is necessary to create five thousand millions, and
+more, of the paper, decree such a creation gladly."  He, too,
+predicted, as many others had done, a time when gold was to lose all
+its value, since all exchanges would be made with this admirable,
+guaranteed paper, and therefore that coin would come out from the
+places where it was hoarded.  He foretold prosperous times to France
+in case these great issues of paper were continued and declared these
+"the only means to insure happiness, glory and liberty to the French
+nation."  Speeches like this gave courage to a new swarm of
+theorists,--it began to be especially noted that men who had never
+shown any ability to make or increase fortunes for themselves abounded
+in brilliant plans for creating and increasing wealth for the country
+at large.
+
+Greatest force of all, on September 27, 1790, came Mirabeau's final
+speech.  The most sober and conservative of his modern opponents
+speaks of its eloquence as "prodigious."  In this the great orator
+dwelt first on the political necessity involved, declaring that the
+most pressing need was to get the government lands into the hands of
+the people, and so to commit to the nation and against the old
+privileged classes the class of landholders thus created.
+
+Through the whole course of his arguments there is one leading point
+enforced with all his eloquence and ingenuity--the excellence of the
+proposed currency, its stability and its security.  He declares that,
+being based on the pledge of public lands and convertible into them,
+the notes are better secured than if redeemable in specie; that the
+precious metals are only employed in the secondary arts, while the
+French paper money represents the first and most real of all property,
+the source of all production, the land; that while other nations have
+been obliged to emit 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 landed security; that whoever takes French paper money
+has practically a mortgage to secure it,--and on landed property which
+can easily be sold to satisfy his claims, while other nations have
+been able only to give a vague claim on the entire nation.  "And," he
+ones, "I would rather have a mortgage on a garden than on a kingdom!"
+
+Other arguments of his are more demagogical.  He declares that the
+only interests affected will be those of bankers and capitalists, but
+that manufacturers will see prosperity restored to them.  Some of his
+arguments seem almost puerile, as when he says, "If gold has been
+hoarded through timidity or malignity, the issue of paper will show
+that gold is not necessary, and it will then come forth."  But, as a
+whole, the speech was brilliant; it was often interrupted by applause;
+it settled the question.  People did not stop to consider that it was
+the dashing speech of an orator and not the matured judgment of a
+financial expert; they did not see that calling Mirabeau or Talleyrand
+to advise upon a monetary policy, because they had shown boldness in
+danger and strength in conflict, was like summoning a prize-fighter to
+mend a watch.
+
+In vain did Maury show that, while the first issues of John Law's
+paper had brought prosperity, those that followed brought misery; in
+vain did he quote from a book published in John Law's time, showing
+that Law was at first considered a patriot and friend of humanity; in
+vain did he hold up to the Assembly one of Law's bills and appeal to
+their memories of the wretchedness brought upon France by them; in
+vain did Du Pont present a simple and really wise plan of substituting
+notes in the payment of the floating debt which should not form a part
+of the ordinary circulating medium; nothing could resist the eloquence
+of Mirabeau.  Barnave, following, insisted that "Law's paper was based
+upon the phantoms of the Mississippi; ours, upon the solid basis of
+ecclesiastical lands," and he proved that the _assignats_ could not
+depreciate further.  Prudhomme's newspaper poured contempt over gold
+as security for the currency, extolled real estate as the only true
+basis and was fervent in praise of the convertibility and
+self-adjusting features of the proposed scheme.  In spite of all this
+plausibility and eloquence, a large minority stood firm to their
+earlier principles; but on the 29th of September, 1790, by a vote of
+508 to 423, the deed was done; a bill was passed authorizing the issue
+of eight hundred millions of new _assignats_, but solemnly declaring
+that in no case should the entire amount put in circulation exceed
+twelve hundred millions.  To make assurance doubly sure, it also
+provided that as fast as the _assignats_ were paid into the treasury
+for land they should be burned, and thus a healthful 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 the
+multitudes of pamphlets expressing this joy which have come down to us
+the "Friend of the Revolution" is the most interesting.  It begins as
+follows: "Citizens, the deed is done.  The _assignats_ are the
+keystone of the arch.  It has just been happily put in position.  Now
+I can announce to you that the Revolution is finished and there only
+remain one or two important questions.  All the rest is but a matter
+of detail which cannot deprive us any longer of the pleasure of
+admiring this important work in its entirety.  The provinces and the
+commercial cities which were at first alarmed at the proposal to issue
+so much paper money now send expressions of their thanks; specie is
+coming out to be joined with paper money.  Foreigners come to us from
+all parts of Europe to seek their happiness under laws which they
+admire; and soon France, enriched by her new property and by the
+national industry which is preparing for fruitfulness, will demand
+still another creation of paper money."
+
+France was now fully committed to a policy of inflation; and, if there
+had been any question of this before, all doubts were removed now by
+various acts very significant as show- ing the exceeding difficulty of
+stopping a nation once in the full tide of a depreciating currency.
+The National Assembly had from the first shown an amazing liberality
+to all sorts of enterprises, wise or foolish, which were urged "for
+the good of the people."  As a result of these and other largesses the
+old cry of the "lack of a circulating medium" broke forth again; and
+especially loud were the clamors for more small bills.  The cheaper
+currency had largely driven out the dearer; paper had caused small
+silver and copper money mainly to disappear; all sorts of notes of
+hand, circulating under the name of "confidence bills," flooded
+France--sixty-three kinds in Paris alone.  This unguaranteed currency
+caused endless confusion and fraud.  Different districts of France
+began to issue their own _assignats_ in small denominations, and this
+action stirred the National Assembly to evade the solemn pledge that
+the circulation should not go above twelve hundred millions and that
+all _assignats_ returned to the treasury for lands should immediately
+be burned.[24] Within a short time there had been received into the
+treasury for lands one hundred and sixty million _livres_ in paper.
+By the terms of the previous acts this amount of paper ought to have
+been retired.  Instead of this, under the plea of necessity, the
+greater part of it was reissued in the form of small notes.
+
+There was, indeed, much excuse for new issues of small notes, for,
+under the theory that an issue of smaller notes would drive silver out
+of circulation, the smallest authorized _assignat_ was for fifty
+_livres_.  To supply silver and copper and hold it in circulation
+everything was tried.  Citizens had been spurred on by law to send
+their silverware and jewels to the mint.  Even the king sent his
+silver and gold plate, and the churches and convents were required by
+law to send to the government melting pot all silver and gold vessels
+not absolutely necessary for public worship.  For copper money the
+church bells were melted down.  But silver and even copper continued
+to become more and more scarce.  In the midst of all this, various
+juggleries were tried, and in November, 1790, the Assembly decreed a
+single standard of coinage, the chosen metal being silver, and the
+ratio between the two precious metals was changed from 15 1/2 to 1, to
+14 1/2 to 1--but all in vain.  It was found necessary to issue the
+dreaded small paper, and a beginning was made by issuing one hundred
+millions in notes of five _francs_, and, ere long, obedient to the
+universal clamor, there were issued parchment notes for various small
+amounts down to a single _sou_.[25]
+
+Yet each of these issues, great or small, was but as a drop of cold
+water to a parched throat.  Although there was already a rise in
+prices which showed that the amount needed for circulation had been
+exceeded, the cry for "more circulating medium" was continued.  The
+pressure for new issues became stronger and stronger.  The Parisian
+populace and the Jacobin Club were especially loud in their demands
+for them; and, a few months later, on June 19, 1791, with few
+speeches, in a silence very ominous, a new issue was made of six
+hundred millions more;--less than nine months after the former great
+issue, with its solemn pledges to keep down the amount in circulation.
+With the exception of a few thoughtful men, the whole nation again
+sang paeans.[26]
+
+In this comparative ease of new issues is seen the action of a law in
+finance as certain as the working of a similar law in natural
+philosophy.  If a material body fall from a height its velocity is
+accelerated, by a well-known law, in a constantly increasing ratio: so
+in issues of irredeemable currency, in obedience to the theories of a
+legislative body or of the people at large, there is a natural law of
+rapidly increasing emission and depreciation.  The first inflation
+bills were passed with great difficulty, after very sturdy resistance
+and by a majority of a few score out of nearly a thousand votes; but
+we observe now that new inflation measures were passed more and more
+easily and we shall have occasion to see the working of this same law
+in a more striking degree as this history develops itself.
+
+During the various stages of this debate there cropped up a doctrine
+old and ominous.  It was the same which appeared toward the end of the
+nineteenth century in the United States during what became known as
+the "greenback craze" and the free "silver craze."  In France it had
+been refuted, a generation before the Revolution, by Turgot, just as
+brilliantly as it was met a hundred years later in the United States
+by James A. Garfield and his compeers.  This was the doctrine that all
+currency, whether gold, paper, leather or any other material, derives
+its efficiency from the official stamp it bears, and that, this being
+the case, a government may relieve itself of its debts and make itself
+rich and prosperous simply by means of a printing
+press:--fundamentally the theory which underlay the later American
+doctrine of "fiat money."
+
+There came mutterings and finally speeches in the Jacobin Club, in the
+Assembly and in newspaper articles and pamphlets throughout the
+country, taking this doctrine for granted.  These could hardly affect
+thinking men who bore in mind the calamities brought upon the whole
+people, and especially upon the poorer classes, by this same theory as
+put in practice by John Law, or as refuted by Turgot, but it served to
+swell the popular chorus in favor of the issue of more _assignats_ and
+plenty of them.[27]
+
+The great majority of Frenchmen now became desperate optimists,
+declaring that inflation is prosperity.  Throughout France there came
+temporary good feeling.  The nation was becoming inebriated with paper
+money.  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 a physiological fact, that, as draughts of paper
+money came faster the successive periods of good feeling grew shorter.
+
+Various bad signs began to appear.  Immediately after each new issue
+came a marked depreciation; curious it is to note the general
+reluctance to assign the right reason.  The decline in the purchasing
+power of paper money was in obedience to the simplest laws in
+economics, but France had now gone beyond her thoughtful statesmen and
+taken refuge in unwavering optimism, giving any explanation of the new
+difficulties rather than the right one.  A leading member of the
+Assembly insisted, in an elaborate speech, that the cause of
+depreciation was simply the want of knowledge and of confidence among
+the rural population and he suggested means of enlightening them.  La
+Rochefoucauld proposed to issue an address to the people showing the
+goodness of the currency and the absurdity of preferring coin.  The
+address was unanimously voted.  As well might they have attempted to
+show that a beverage made by mixing a quart of wine and two quarts of
+water would possess all the exhilarating quality of the original,
+undiluted liquid.
+
+Attention was aroused by another menacing fact;--specie disappeared
+more and more.  The explanations of this fact also displayed wonderful
+ingenuity in finding false reasons and in evading the true one.  A
+very common explanation was indicated in Prudhomme's newspaper, "Les
+Révolutions de Paris," of January 17, 1791, which declared that coin
+"will keep rising until the people shall have hanged a broker."
+Another popular theory was that the Bourbon family were, in some
+mysterious way, drawing off all solid money to the chief centers of
+their intrigues in Germany.  Comic and, at the same time, pathetic,
+were evidences of the wide-spread idea that if only a goodly number of
+people engaged in trade were hanged, the par value of the _assignats_
+would be restored.
+
+Still another favorite idea was that British emissaries were in the
+midst of the people, instilling notions hostile to paper.  Great
+efforts were made to find these emissaries and more than one innocent
+person experienced the popular wrath under the supposition that he was
+engaged in raising gold and depressing paper.  Even Talleyrand, shrewd
+as he was, insisted that the cause was simply that the imports were
+too great and the exports too little.[28] As well might he explain
+that fact that, when oil is mingled with water, water sinks to the
+bottom, by saying that this is because the oil rises to the top.  This
+disappearance of specie was the result of a natural law as simple and
+as sure in its action as gravitation; the superior currency had been
+withdrawn because an inferior currency could be used.[29] Some efforts
+were made to remedy this.  In the municipality of Quilleboeuf a
+considerable amount in specie having been found in the possession of a
+citizen, the money was seized and sent to the Assembly.  The people of
+that town treated this hoarded gold as the result of unpatriotic
+wickedness or madness, instead of seeing that it was but the sure
+result of a law working in every land and time, when certain causes
+are present.  Marat followed out this theory by asserting that death
+was the proper penalty for persons who thus hid their money.
+
+Still another troublesome fact began now to appear.  Though paper
+money had increased in amount, prosperity had steadily diminished.  In
+spite of all 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 of great service to manufacturers and restore
+prosperity to them and their workmen.  The latter were for a time
+deluded, but were at last rudely awakened from this delusion.  The
+plenty of currency had at first stimulated production and created a
+great activity in manufactures, but soon the markets were glutted and
+the demand was diminished.  In spite of the wretched financial policy
+of years gone by, and especially in spite of the Revocation of the
+Edict of Nantes, by which religious bigotry had driven out of the
+kingdom thousands of its most skillful Protestant workmen, the
+manufactures of France had before the Revolution come into full bloom.
+In the finer woolen goods, in silk and satin fabrics of all sorts, in
+choice pottery and porcelain, in manufactures of iron, steel, and
+copper, they had again taken their old leading place upon the
+Continent.  All the previous changes had, at the worst, done no more
+than to inflict a momentary check on this highly developed system of
+manufactures.  But what the bigotry of Louis XIV and the shiftlessness
+of Louis XV could not do in nearly a century, was accomplished by this
+tampering with the currency in a few months.  One manufactory after
+another stopped.  At one town, Lodève, five thousand workmen were
+discharged from the cloth manufactories.  Every cause except the right
+one was assigned for this.  Heavy duties were put upon foreign goods;
+everything that tariffs and custom-houses could do was done.  Still
+the great manufactories of Normandy were closed, those of the rest of
+the kingdom speedily followed, and vast numbers of workmen in all
+parts of the country were thrown out of employment.[30] Nor was this
+the case with the home demand alone.  The foreign demand, which at
+first had been stimulated, soon fell off.  In no way can this be
+better stated than by one of the most thoughtful historians of modern
+times, who says, "It is true that at first the _assignats_ gave the
+same impulse to business in the city as in the country, but the
+apparent improvement had no firm foundation, even in the towns.
+Whenever a great quantity of paper money is suddenly issued we
+invariably see a rapid increase of trade.  The great quantity of the
+circulating medium sets in motion all the energies of commerce and
+manufactures; capital for investment is more easily found than usual
+and trade perpetually receives fresh nutriment.  If this paper
+represents real credit, founded upon order and legal security, from
+which it can derive a firm and lasting value, such a movement may be
+the starting point of a great and widely-extended prosperity, as, for
+instance, a splendid improvement in English agriculture was
+undoubtedly owing 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 case with the French _assignats_ as early as February,
+1791, it can confer no lasting benefits.  For the moment, perhaps,
+business receives an impulse, all the more violent because every one
+endeavors to invest his doubtful paper in buildings, machines and
+goods, which, under all circumstances, retain some intrinsic value.
+Such a movement was witnessed in France in 1791, and from every
+quarter there came satisfactory reports of the activity of
+manufactures."
+
+"But, for the moment, the French manufacturers derived great advantage
+from this state of things.  As their products could be so cheaply paid
+for, orders poured in from foreign countries to such a degree that it
+was often difficult for the manufacturers to satisfy their customers.
+It is easy to see that prosperity of this kind must very soon find its
+limit.  . . .  When a further fall in the _assignats_ took place this
+prosperity would necessarily collapse, and be succeeded by a crisis
+all the more destructive the more deeply men had engaged in
+speculation under the influence of the first favorable prospects."[31]
+
+Thus came a collapse in manufacturing and commerce, just as it had
+come previously in France: just as it came at various periods in
+Austria, Russia, America, and in all countries where men have tried to
+build up prosperity on irredeemable paper.[32]
+
+All this breaking down of the manufactures and commerce of the nation
+made fearful inroads on the greater fortunes; but upon the lesser, and
+upon the little properties of the masses of the nation who relied upon
+their labor, it pressed with intense severity.  The capitalist could
+put his surplus paper money into the government lands and await
+results; but the men who needed their money from day to day suffered
+the worst of the misery.  Still another difficulty appeared.  There
+had come a complete uncertainty as to the future.  Long before the
+close of 1791 no one knew whether 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 means in business.  Enterprise received a
+mortal blow.  Demand for labor was still further diminished; and here
+came a new cause of calamity: for this uncertainty withered all
+far-reaching undertakings.  The business of France dwindled into a
+mere living from hand to mouth.  This state of things, too, while it
+bore heavily upon the moneyed classes, was still more ruinous to those
+in moderate and, most of all, to those in straitened circumstances.
+With the masses of the people, the purchase of every article of supply
+became a speculation--a speculation in which the professional
+speculator had an immense advantage over the ordinary buyer.  Says the
+most brilliant of apologists for French revolutionary statesmanship,
+"Commerce was dead; betting took its place."[33]
+
+Nor was there any compensating advantage to the mercantile classes.
+The merchant was forced to add to his ordinary profit a sum sufficient
+to cover probable or possible fluctuations in value, and while prices
+of products thus went higher, the wages of labor, owing to the number
+of workmen who were thrown out of employment, went lower.
+
+But these evils, though great, were small compared to those far more
+deep-seated signs of disease which now showed themselves throughout
+the country.  One of these was the _obliteration of thrift_ from the
+minds of the French people.  The French are naturally thrifty; but,
+with such masses of money and with such uncertainty as to its future
+value, the ordinary motives for saving and care diminished, And a
+loose luxury spread throughout the country.  A still worse outgrowth
+was the increase of speculation and gambling.  With the plethora of
+paper currency in 1791 appeared the first evidences of that cancerous
+disease which always follows large issues of irredeemable currency,--a
+disease more permanently injurious to a nation than war, pestilence or
+famine.  For at the great metropolitan centers grew a luxurious,
+speculative, stock-gambling body, which, like a malignant tumor,
+absorbed into itself the strength of the nation and sent out its
+cancerous fibres to the remotest hamlets.  At these city centers
+abundant wealth seemed to be piled up: in the country at, large there
+grew a dislike of steady labor and a contempt for moderate gains and
+simple living.  In a pamphlet published in May, 1791, we see how, in
+regard to this also, public opinion was blinded.  The author calls
+attention to the increase of gambling in values of all sorts in these
+words: "What shall I say of the stock-jobbing, as frightful as it is
+scandalous, which goes on in Paris under the very eyes of our
+legislators,--a most terrible evil, yet, under the present
+circumstances,--necessary?"  The author also speaks of these
+stock-gamblers as using the most insidious means to influence public
+opinion in favor of their measures; and then proposes, seriously, a
+change in various matters of detail, thinking that this would prove a
+sufficient remedy for an evil which had its roots far down in the
+whole system of irredeemable currency.  As well might a physician
+prescribe a pimple wash for a diseased liver.[34]
+
+Now began to be seen more plainly some of the many ways in which an
+inflation policy robs the working class.  As these knots of plotting
+schemers at the city centers were becoming bloated with sudden wealth,
+the producing classes of the country, though having in their
+possession more and more currency, grew lean.  In the schemes and
+speculations put forth by stock-jobbers and stimulated by the printing
+of more currency, multitudes of small fortunes were absorbed and lost
+while a few swollen fortunes were rapidly aggregated in the larger
+cities.  This crippled a large class in the country districts, which
+had employed a great number of workmen.
+
+In the leading French cities now arose a luxury and license which was
+a greater evil even than the plundering which ministered to it.  In
+the country the gambling spirit spread more and more.  Says the same
+thoughtful historian whom I have already quoted: "What a prospect for
+a country when its rural population was changed into a great band of
+gamblers!"[35]
+
+Nor was this reckless and corrupt spirit confined to business men; it
+began to break out in official circles, and public men who, a few
+years before, had been thought above all possibility of taint, became
+luxurious, reckless, cynical and finally corrupt.  Mirabeau, himself,
+who, not many months previous, had risked imprisonment and even death
+to establish constitutional government, was now--at this very
+time--secretly receiving heavy bribes.  When, at the downfall of the
+monarchy a few years later, the famous iron chest of the Tuileries was
+opened, there were found evidences that, in this carnival of inflation
+and corruption, he had been a regularly paid servant of the Royal
+court.[36] The artful plundering of the people at large was bad
+enough, but worse still was this growing corruption in official and
+legislative circles.  Out of the speculating and gambling of the
+inflation period grew luxury, and, out of this, corruption.  It grew
+as naturally as a fungus 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 the legislative body as Jullien of Toulouse, Delaunay of
+Angers, Fabre d'Eglantine and their disciples, were among the most
+noxious of those conspiring by legislative action to raise and depress
+securities for stock-jobbing purposes.  Bribery of legislators
+followed as a matter of course, Delaunay, Jullien and Chabot accepted
+a bribe of five hundred thousand _livres_ for aiding legislation
+calculated to promote the purposes of certain stock-jobbers.  It is
+some comfort to know that nearly all concerned were guillotined for
+it.[37]
+
+It is true that the number of these corrupt legislators was small, far
+less than alarmists led the nation to suppose, but there were enough
+to cause wide-spread distrust, cynicism and want of faith in any
+patriotism or any virtue.
+
+
+II.
+
+Even worse than this was the breaking down of the morals of the
+country at large, resulting from the sudden building up of
+ostentatious wealth in a few large cities, and from the gambling,
+speculative spirit spreading from these to the small towns and rural
+districts.  From this was developed an even more disgraceful
+result,--the decay of a true sense of national good faith.  The
+patriotism which the fear of the absolute monarchy, the machinations
+of the court party, the menaces of the army and the threats of all
+monarchical Europe had been unable to shake was gradually
+disintegrated by this same speculative, stock-jobbing habit fostered
+by the superabundant currency.  At the outset, in the discussions
+preliminary to the first issue of paper money, Mirabeau and others who
+had favored it had insisted that patriotism as well as an enlightened
+self-interest, would lead the people to keep up the value of paper
+money.  The very opposite of this was now revealed, for there
+appeared, as another outgrowth of this disease, what has always been
+seen under similar circumstances.  It is a result of previous, and a
+cause of future evils.  This outgrowth was a vast debtor class in the
+nation, directly interested in the depreciation of the currency in
+which they were to pay their debts.  The nucleus of this class was
+formed by those who had purchased the church lands from the
+government.  Only small payments down had been required and the
+remainder was to be paid in deferred installments: an indebtedness of
+a multitude of people had thus been created to the amount of hundreds
+of millions.  This body of debtors soon saw, of course, that their
+interest was to depreciate the currency in which their debts were to
+be paid; and these were speedily joined by a far more influential
+class;--by that class whose speculative tendencies had been stimulated
+by the abundance of paper money, and who had gone largely into debt,
+looking for a rise in nominal values.  Soon demagogues of the viler
+sort in the political clubs began to pander to it; a little later
+important persons in this debtor class were to be found intriguing in
+the Assembly--first in its seats and later in more conspicuous places
+of public trust.  Before long, the debtor class became a powerful body
+extending through all ranks of society.  From the stock-gambler who
+sat in the Assembly to the small land speculator in the rural
+districts; from the sleek inventor of _canards_ on the Paris Exchange
+to the lying stock-jobber in the market town, all pressed vigorously
+for new issues of paper; all were apparently able to demonstrate to
+the people that in new issues of paper lay the only chance for
+national prosperity.
+
+This great debtor class, relying on the multitude who could be
+approached by superficial arguments, soon gained control.  Strange as
+it might seem to those who have not watched the same causes at work at
+a previous period in France and at various times in other countries,
+while every issue of paper money really made matters worse, a
+superstition gained ground among the people at large that, if only
+_enough_ paper money were issued and were more cunningly handled the
+poor would be made rich.  Henceforth, all opposition was futile.  In
+December, 1791, a report was made in the Legislative Assembly in favor
+of yet another great issue of three hundred millions more of paper
+money.  In regard to this report Cambon said that more money was
+needed but asked, "Will you, in a moment when stock-jobbing is carried
+on with such fury, give it new power by adding so much more to the
+circulation?" But such high considerations were now little regarded.
+Dorisy declared, "There is not enough money yet in circulation; if
+there were more the sales of national lands would be more rapid."  And
+the official report of his speech states that these words were
+applauded.
+
+Dorisy then went on to insist that the government lands were worth at
+least thirty-five hundred million _livres_ and said: "Why should
+members ascend the tribunal and disquiet France? Fear nothing; your
+currency reposes upon a sound mortgage."  Then followed a
+glorification of the patriotism of the French people, which, he
+asserted, would carry the nation through all its difficulties.
+
+Becquet, speaking next, declared that "The circulation is becoming
+more rare every day."
+
+On December 17, 1791, a new issue was ordered, making in all
+twenty-one hundred millions authorized.  Coupled with this was the
+declaration that the total amount in actual circulation should never
+reach more than sixteen hundred millions.  Before this issue the value
+of the 100 _livres_ note had fallen at Paris to about 80 _livres_;[38]
+immediately afterward it fell to about 68 _livres_.  What limitations
+of the currency were worth may be judged from the fact that not only
+had the declaration made hardly a year before, limiting the amount in
+circulation to twelve hundred millions, been violated, but the
+declaration, made hardly a month previous, in which the Assembly had
+as solemnly limited the amount of circulation to fourteen hundred
+millions, had also been repudiated.
+
+The evils which we have already seen arising from the earlier issues
+were now aggravated; but the most curious thing evolved out of all
+this chaos was a _new system of political economy_.  In speeches,
+newspapers and pamphlets about this time, we begin to find it declared
+that, after all, a depreciated currency is a blessing; that gold and
+silver form an unsatisfactory standard for measuring values: that it
+is a good thing to have a currency that will not go out of the kingdom
+and which separates France from other nations: that thus shall
+manufacturers be encouraged; that commerce with other nations may be a
+curse, and hindrance thereto may be a blessing; that the laws of
+political economy however applicable in other times, are not
+applicable to this particular period, and, however operative in other
+nations, are not now so in France; that the ordinary rules of
+political economy are perhaps suited to the minions of despotism but
+not to the free and enlightened inhabitants of France at the close of
+the eighteenth century; that the whole state of present things, so far
+from being an evil is a blessing.  All these ideas, and others quite
+as striking, were brought to the surface in the debates on the various
+new issues.[39]
+
+Within four months came another report to the Assembly as ingenious as
+those preceding.  It declared: "Your committee are thoroughly
+persuaded that the amount of the circulating medium before the
+Revolution was greater than that of the _assignats_ today: but at that
+time the money circulated slowly and now it passes rapidly so that one
+thousand million _assignats_ do the work of two thousand millions of
+specie."  The report foretells further increase in prices, but by some
+curious jugglery reaches a conclusion favorable to further inflation.
+Despite these encouragements the _assignats_ nominally worth 100
+_livres_ had fallen, at the beginning of February, 1792, to about 60
+_livres_, and during that month fell to 53 _livres_.[40]
+
+In March, Clavière became minister of financ.  He was especially
+proud of his share in the invention and advocacy of the _assignats_,
+and now pressed their creation more vigorously than ever, and on April
+30th, of the same year, came the fifth great issue of paper money,
+amounting to three hundred millions: at about the same time Cambon
+sneered ominously at public creditors as "rich people, old financiers
+and bankers."  Soon payment was suspended on dues to public creditors
+for all amounts exceeding ten thousand _francs_.
+
+This was hailed by many as a measure in the interests of the poorer
+classes of people, but the result was that it injured them most of
+all.  Henceforward, until the end of this history, capital was quietly
+taken from labor and locked up in all the ways that financial
+ingenuity could devise.  All that saved thousands of laborers in
+France from starvation was that they were drafted off into the army
+and sent to be killed on foreign battlefields.
+
+On the last day of July, 1792, came another brilliant re- port from
+Fouquet, showing that the total amount of currency already issued was
+about twenty-four hundred millions, but claiming that the national
+lands were worth a little more than this sum.  A decree was now passed
+issuing three hundred millions more.  By this the prices of everything
+were again enhanced save one thing, and that one thing was labor.
+Strange as it may at first appear, while the depreciation of the
+currency had raised all products enormously in price, the stoppage of
+so many manufactories and the withdrawal of capital caused wages in
+the summer of 1792, after all the 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 the truth uttered by Daniel Webster,
+that "of all the contrivances for cheating the laboring classes of
+mankind, none has been more effective than that which deludes them
+with paper-money."[41]
+
+Issue after issue followed at intervals of a few months, until, on
+December 14, 1792, we have an official statement to the effect that
+thirty-five hundred millions had been put forth, of which six hundred
+millions had been burned, leaving in circulation twenty-eight hundred
+millions.
+
+When it is remembered that there was little business to do and that
+the purchasing power of the _livre_ or franc, when judged by the
+staple products of the country, was equal to about half the present
+purchasing power of our own dollar, it will be seen into what evils
+France had drifted.  As the mania for paper money ran its course, even
+the _sous_, obtained by melting down the church bells, were more and
+more driven out of circulation and more and more parchment notes from
+twenty _four_ to five were issued, and at last pieces of one _sou_, of
+half a _sou_ and even of one-quarter of a _sou_ were put in
+circulation.[42]
+
+But now another source of wealth was opened to the nation.  There came
+a confiscation of the large estates of landed proprietors who had fled
+the country.  An estimate in 1793 made the value of these estates
+three billions of _francs_.  As a consequence, the issues of paper
+money were continued in increased amounts, on the old theory that they
+were guaranteed by the solemn pledge of these lands belonging to the
+state.  Under the Legislative Assembly through the year 1792 new
+issues were made virtually every month, so that at the end of January,
+1793, it was more and more realized that the paper money actually in
+circulation amounted close upon three thousand millions of _francs_.
+All this had been issued publicly, in open sessions of the National
+and Legislative Assemblies; but now under the National Convention, the
+two Committees of Public Safety and of Finance began to decree new
+issues privately, in secret session.
+
+As a result, the issues became larger still, and four hundred workmen
+were added to those previously engaged in furnishing this paper money,
+and these were so pressed with work from six o'clock in the morning
+until eight in the evening that they struck for higher wages and were
+successful.[43]
+
+The consequences of these overissues now began to be more painfully
+evident to the people at large.  Articles of common consumption became
+enormously dear and prices were constantly rising.  Orators in the
+Legislative Assembly, clubs, local meetings and elsewhere now
+endeavored to enlighten people by assigning every reason for this
+depreciation save the true one.  They declaimed against the corruption
+of the ministry, the want of patriotism among the Moderates, the
+intrigues of the emigrant nobles, the hard-heartedness of the rich,
+the monopolizing spirit of the merchants, the perversity of the
+shopkeepers,---each and all of these as causes of the difficulty.[44]
+
+This decline in the government paper was at first somewhat masked by
+fluctuations.  For at various times the value of the currency _rose_.
+The victory of Jemappes and the general success of the French army
+against the invaders, with the additional security offered by new
+confiscations of land, caused, in November, 1792, an appreciation in
+the value of the currency; the franc had stood at 57 and it rose to
+about 69; but the downward tendency was soon resumed and in September,
+1793, the _assignats_ had sunk below 30.  Then sundry new victories
+and coruscations of oratory gave momentary confidence so that in
+December, 1793, they rose above 50.  But despite these fluctuations
+the downward tendency soon became more rapid than ever.[45]
+
+The washerwomen of Paris, finding soap so dear that they could hardly
+purchase it, insisted that all the merchants who were endeavoring to
+save something of their little property by refusing to sell their
+goods for the wretched currency with which France was flooded, should
+be punished with death; the women of the markets and the hangers-on of
+the Jacobin Club called loudly for a law "to equalize the value of
+paper money and silver coin."  It was also demanded that a tax be laid
+especially on the rich, to the amount of four hundred million
+_francs_, to buy bread.  Marat declared loudly that the people, by
+hanging shopkeepers and plundering stores, could easily remove the
+trouble.  The result was that on the 28th of February, 1793, at eight
+o'clock in the evening, a mob of men and women in disguise began
+plundering the stores and shops of Paris.  At first they demanded only
+bread; soon they insisted on coffee and rice and sugar; at last they
+seized everything on which they could lay their hands--cloth,
+clothing, groceries and luxuries of every kind.  Two hundred such
+places were plundered.  This was endured for six hours and finally
+order was restored only by a grant of seven million _francs_ to buy
+off the mob.  The new political economy was beginning to bear, its
+fruits luxuriantly.  A gaudy growth of it appeared at the City Hall of
+Paris when, in response to the complaints of the plundered merchants,
+Roux declared, in the midst of great applause, that "shopkeepers were
+only giving back to the people what they had hitherto robbed them of."
+
+The mob having thus been bought off by concessions and appeased by
+oratory, the government gained time to think, and now came a series of
+amazing expedients,--and yet all perfectly logical.
+
+Three of these have gained in French history an evil pre-eminence, and
+first of the three was the Forced Loan.
+
+In view of the fact that the well-to-do citizens were thought to be
+lukewarm in their support of the politicians controlling the country,
+various demagogues in the National Convention, which had now succeeded
+the National, Constituent and Legislative Assemblies, found ample
+matter for denunciations long and loud.  The result outside the
+Convention was increased activity of the guillotine; the results
+inside were new measures against all who had money, and on June 22,
+1793, the Convention determined that there should be a Forced Loan,
+secured on the confiscated lands of the emigrants and levied upon all
+married men with incomes of ten thousand _francs_, and upon all
+unmarried men with incomes of six thousand _francs_.  It was
+calculated that these would bring into the treasury a thousand
+millions of _francs_.  But a difficulty was found.  So many of the
+rich had lied or had concealed their wealth that only a fifth of the
+sum required could be raised, and therefore a law was soon passed
+which levied forced loans upon incomes as low as one thousand,
+_francs_,--or, say, two hundred dollars of American money.  This tax
+was made progressive.  On the smaller proprietors it was fixed at
+one-tenth and on the larger, that is, on all incomes above nine
+thousand _francs_, it was made one-half of the entire income.  Little
+if any provision was made for the repayment of this loan but the
+certificates might be used for purchasing the confiscated real estate
+of the church and of the nobility.[46]
+
+But if this first expedient shows how naturally a "fiat" money system
+runs into despotism, the next is no less instructive in showing how
+easily it becomes repudiation and dishonor.
+
+As we have seen, the first issue of the _assignats_,--made by the
+National Assembly, bore a portrait of the king; but on the various
+issues after the establishment of a republic this emblem had been
+discarded.  This change led to a difference in value between the
+earlier and the later paper money.  The wild follies of fanatics and
+demagogues had led to an increasing belief that the existing state of
+things could not last; that the Bourbons must ere long return; that in
+such case, while a new monarch would repudiate all the vast mass of
+the later paper issued by the Republic, he would recognize that first
+issue bearing the face and therefore the guarantee of the king.  So it
+was that this first issue came to bear a higher value than those of
+later date.  To meet this condition of things it was now proposed to
+repudiate an that earlier issue.  In vain did sundry more thoughtful
+members of the Convention plead that this paper money, amounting to
+five hundred and fifty-eight millions of _francs_, bore the solemn
+guarantee of the nation, as well as of the king; the current was
+irresistible.  All that Cambon, the great leader of finance at that
+time, could secure was a clause claiming to protect the poor, to the
+effect that this demonetization should not extend to notes below a
+hundred _francs_ in value; and it was also agreed that any of the
+notes, large or small, might be received in payment of taxes and for
+the confiscated property of the clergy and nobility.  To all the
+arguments advanced against this breach of the national faith Danton,
+then at the height of his power, simply declared that only aristocrats
+could favor notes bearing the royal portrait, and gave forth his
+famous utterance: "Imitate Nature, which watches over the preservation
+of the race but has no regard for individuals."  The decree was passed
+on the 31st of July, 1793, yet its futility was apparent in less than
+two months, when the Convention decreed that there should be issued
+two thousand millions of _francs_ more in _assignats_ between the
+values of ten _sous_ and four hundred _francs_, and when, before the
+end of the year, five hundred millions more were authorized.[47]
+
+The third outgrowth of the vast issue of fiat money was the _Maximum_.
+As far back as November, 1792, the Terrorist associate of Robespierre,
+St. Just, in view of the steady rise in prices of the necessaries of
+life, had proposed a scheme by which these prices should be
+established by law, at a rate proportionate to the wages of the
+working classes.  This plan lingered in men's minds, taking shape in
+various resolutions and decrees until the whole culminated on
+September 29, 1793, in the Law of the _Maximum_.
+
+While all this legislation was high-handed, it was not careless.  Even
+statesmen of the greatest strength, having once been drawn into this
+flood, were borne on into excesses which, a little earlier, would have
+appalled them.  Committees of experts were appointed to study the
+whole subject of prices, and at last there were adopted the great
+"four rules" which seemed to statesmen of that time a masterly
+solution of the whole difficulty.[48]
+
+_First_, the price of each article of necessity was to be fixed at one
+and one-third its price in 1790.  _Secondly_, all transportation was
+to be added at a fixed rate per league.  _Thirdly_, five per cent was
+to be added for the profit of the wholesaler.  _Fourthly_, ten per
+cent was to be added for the profit of the retailer.  Nothing could
+look more reasonable.  Great was the jubilation.  The report was
+presented and supported by Barrère,--"the tiger monkey,"--then in all
+the glory of his great orations: now best known from his portrait by
+Macaulay.  Nothing could withstand Barrère's eloquence.  He insisted
+that France had been suffering from a "_Monarchical_ commerce which
+only sought wealth," while what she needed and what she was now to
+receive was a "_Republican_ commerce--a commerce of moderate profits
+and virtuous."  He exulted in the fact that "France alone enjoys such
+a commerce,--that it exists in no other nation."  He poured contempt
+over political economy as "that science which quacks have corrupted,
+which pedants have obscured and which academicians have depreciated."
+France, he said, has something better, and he declared in conclusion,
+"The needs of the people will no longer be spied upon in order that
+the commercial classes may arbitrarily take advantage."[49]
+
+The first result of the _Maximum_ was that every means was taken to
+evade the fixed price imposed, and the farmers brought in as little
+produce as they possibly could.  This increased the scarcity, and the
+people of the large cities were put on an allowance.  Tickets were
+issued authorizing the bearer to obtain at the official prices a
+certain amount of bread or sugar or soap or wood or coal to cover
+immediate necessities.[50]
+
+But it was found that the _Maximum_, with its divinely revealed four
+rules, could not be made to work well--even by the shrewdest devices.
+In the greater part of France it could not be enforced.  As to
+merchandise of foreign origin or merchandise into which any foreign
+product entered, the war had raised it far above the price allowed
+under the first rule, namely, the price of 1790, with an addition of
+one-third.  Shopkeepers therefore could not sell such goods without
+ruin.  The result was that very many went out of business and the
+remainder forced buyers to pay enormous charges under the very natural
+excuse that the seller risked his life in trading at all.  That this
+excuse was valid is easily seen by the daily lists of those condemned
+to the guillotine, in which not infrequently figure the names of men
+charged with violating the _Maximum_ laws.  Manufactures were very
+generally crippled and frequently destroyed, and agriculture was
+fearfully depressed.  To detect goods concealed by farmers and
+shopkeepers, a spy system was established with a reward to the
+informer of one-third of the value of the goods discovered.  To spread
+terror, the Criminal Tribunal at Strassburg was ordered to destroy the
+dwelling of any one found guilty of selling goods above the price set
+by law.  The farmer often found that he could not raise his products
+at anything like the price required by the new law, and when he tried
+to hold back his crops or cattle, alleging that he could not afford to
+sell them at the prices fixed by law, they were frequently taken from
+him by force and he was fortunate if paid even in the depreciated fiat
+money--fortunate, indeed, if he finally escaped with his life.[51]
+
+Involved in all these perplexities, the Convention tried to cut the
+Gordian knot.  It decreed that any person selling gold or silver coin,
+or making any difference in any transaction between paper and specie,
+should be imprisoned in irons for six years:--that any one who refused
+to accept a payment in _assignats_, or accepted _assignats_ at a
+discount, should pay a fine of three thousand _francs_; and that any
+one committing this crime a second time should pay a fine of six
+thousand _francs_ and suffer imprisonment twenty years in irons.
+Later, on the 8th of September, 1793, the penalty for such offences
+was made death, with confiscation of the criminal's property, and so
+reward was offered to any person informing the authorities regarding
+any such criminal transaction.  To reach the climax of ferocity, the
+Convention decreed, in May, 1794, that the death penalty should be
+inflicted on any person convicted of "having asked, be- fore a bargain
+was concluded, in what money payment was to be made."  Nor was this
+all.  The great finance minister, Cambon, soon saw that the worst
+enemies of his policy were gold and silver.  Therefore it was that,
+under his lead, the Convention closed the Exchange and finally, on
+November 13, 1793, under terrifying penalties, suppressed all commerce
+in the precious metals.  About a year later came the abolition of the
+Maximum itself.[52]
+
+It is easily seen that these _Maximum_ laws were perfectly logical.
+Whenever any nation intrusts to its legislators the issue of a
+currency not based on the idea of redemption in standard coin
+recognized in the commerce of civilized nations, it intrusts to them
+the power to raise or depress the value of every article in the
+possession of every citizen.  Louis XIV had claimed that all property
+in Prance was his own, and that what private persons held was as much
+his as if it were in his coffers.  But even this assumption is
+exceeded by the confiscating power exercised in a country, where,
+instead of leaving values to be measured by a standard common to the
+whole world, they are left to be depressed or raised at the whim,
+caprice or interest of a body of legislators.  When this power is
+given, the power of prices is inevitably included in it.[53]
+
+It may be said that these measures were made necessary by the war then
+going on.  Nothing could be more baseless than such an objection.  In
+this war the French soon became generally successful.  It was quickly
+pushed mainly upon foreign soil.  Numerous contributions were levied
+upon the subjugated countries to support the French armies.  The war
+was one of those in which the loss, falling apparently on future
+generations, first stimulates, in a sad way, trade and production.
+The main cause of these evils was tampering with the circulating
+medium of an entire nation; keeping all values in fluctuation;
+discouraging enterprise; paralyzing energy; undermining sobriety;
+obliterating thrift; promoting extravagance and exciting riot by the
+issue of an irredeemable currency.  The true business way of meeting
+the enormous demands on France during the first years of the
+Revolution had been stated by a true statesman and sound financier, Du
+Pont de Nemours, at the very beginning.  He had shown that using the
+same paper as a circulating medium and as a means for selling the
+national real estate was like using the same implement for an oyster
+knife and a razor.[54]
+
+It has been argued that the _assignats_ sank in value because they
+were not well secured,--that securing them on government real estate
+was as futile as if the United States had, in the financial troubles
+of its early days, secured notes on its real estate.  This objection
+is utterly fallacious.  The government lands of our country were
+remote from the centers of capital and difficult to examine; the
+French national real estate was near these centers--even _in_
+them--and easy to examine.  Our national real estate was unimproved
+and unproductive; theirs was improved and productive--its average
+productiveness in market in ordinary times being from four to five per
+cent.[55]
+
+It has also been objected that the attempt to secure the _assignats_
+on government real estate failed because of the general want of
+confidence in the title derived by the purchasers from the new
+government.  Every thorough student of that period must know that this
+is a misleading statement.  Everything shows that the vast majority of
+the French people had a fanatical confidence in the stability of the
+new government during the greater part of the Revolution.  There were
+disbelievers in the security of the _assignats_ just as there were
+disbelievers in the paper money of the United States throughout our
+Civil War; but they were usually a small minority.  Even granting that
+there was a doubt as to investment in French lands, the French people
+certainly had as much confidence in the secure possession of
+government lands as any people can ever have in large issues of
+government bonds: indeed, it is certain that they had far more
+confidence in their lands as a security than modern nations can
+usually have in large issues of bonds obtained by payments of
+irredeemable paper.  One simple fact, as stated by John Stuart Mill,
+which made _assignats_ difficult to convert into real estate was that
+the vast majority of people could not afford to make investments
+outside their business; and this fact is no less fatal to any attempt
+to contract large issues of irredeemable paper--save, perhaps, a bold,
+statesmanlike attempt, which seizes the best time and presses every
+advantage, eschewing all juggling devices and sacrificing everything
+to maintain a sound currency based on standards common to the entire
+financial world.
+
+And now was seen, taking possession of the nation, that idea which
+developed so easily out of the fiat money system;--the idea that the
+ordinary needs of government may be legitimately met wholly by the
+means of paper currency;--that taxes may be dispensed with.  As a
+result, it was found that the _assignat_ printing press was the one
+resource left to the government, and the increase in the volume of
+paper money became every day more appalling.
+
+It will doubtless surprise many to learn that, in spite of these
+evident results of too much currency, the old cry of a "scarcity of
+circulating medium" was not stilled; it appeared not long after each
+issue, no matter how large.
+
+But every thoughtful student of financial history knows that this cry
+always comes after such issues--nay, that it _must_ come,--because in
+obedience to a natural law, the former scarcity, or rather
+_insufficiency_ of currency recurs just as soon as prices become
+adjusted to the new volume, and there comes some little revival of
+business with the usual increase of credit.[56]
+
+In August, 1793, appeared a new report by Cambon.  No one can read it
+without being struck by its mingled ability and folly.  His final plan
+of dealing with the public debt has outlasted all revolutions since,
+but his disposition of the inflated currency came to a wretched
+failure.  Against Du Pont, who showed conclusively that the wild
+increase of paper money was leading straight to, ruin, Cambon carried
+the majority in the great assemblies and clubs by sheer audacity--the
+audacity of desperation.  Zeal in supporting the _assignats_ became
+his religion.  The National Convention which succeeded the Legislative
+Assembly, issued in 1793 over three thousand millions of _assignats_,
+and, of these, over twelve hundred millions were poured into the
+circulation.  And yet Cambon steadily insisted that the security for
+the _assignat_ currency was perfect.  The climax of his zeal was
+reached when he counted as assets in the national treasury the
+indemnities which, he declared, France was sure to receive after
+future victories over the allied nations with which she was then
+waging a desperate war.  As patriotism, it was sublime; as finance it
+was deadly.[57]
+
+Everything was tried.  Very elaborately he devised a funding scheme
+which, taken in connection with his system of issues, was in effect
+what in these days would be called an "_interconvertibility scheme_"
+By various degrees of persuasion or force,--the guillotine looming up
+in the background,--holders of _assignats_ were urged to convert them
+into evidence of national debt, bearing interest at five per cent,
+with the understanding that if more paper were afterward needed more
+would be issued.  All in vain.  The official tables of depreciation
+show that the _assignats_ continued to fall.  A forced loan, calling
+in a billion of these, checked this fall, but only for a moment.  The
+"_interconvertibility scheme_" between currency and bonds failed as
+dismally as the "_interconvertibility scheme_" between currency and
+land had failed.[58]
+
+A more effective expedient was a law confiscating the property of all
+Frenchmen who left France after July 14, 1789, and who had not
+returned.  This gave new land to be mortgaged for the security of
+paper money.
+
+All this vast chapter in financial folly is sometimes referred to as
+if it resulted from the direct action of men utterly unskilled in
+finance.  This is a grave error.  That wild schemers and dreamers took
+a leading part in setting the fiat money system going is true; that
+speculation and interested financiers made it worse is also true: but
+the men who had charge of French finance during the Reign of Terror
+and who made these experiments, which seem to us so monstrous, in
+order to rescue themselves and their country from the flood which was
+sweeping everything to financial ruin were universally recognized as
+among the most skillful and honest financiers in Europe.  Cambon,
+especially, ranked then and ranks now as among the most expert in any
+period.  The disastrous results of all his courage and ability in the
+attempt to stand against the deluge of paper money show how powerless
+are the most skillful masters of finance to stem the tide of fiat
+money calamity when once it is fairly under headway; and how useless
+are all enactments which they can devise against the underlying laws
+of nature.
+
+Month after month, year after year new issues went on.  Meanwhile
+everything possible was done to keep up the value of paper.  The city
+authorities of Metz took a solemn oath that the _assignats_ should
+bear the same price whether in paper or specie,--and whether in buying
+or selling, and various other official bodies throughout the nation
+followed this example.  In obedience to those who believed with the
+market women of Paris, as stated in their famous petition, that "laws
+should be passed making paper money as good as gold," Couthon, in
+August, 1793, had proposed and carried a law punishing any person who
+should sell _assignats_ at less than their nominal value with
+imprisonment for twenty years in chains, and later carried a law
+making investments in foreign countries by Frenchmen punishable with
+death.[59]
+
+But to the surprise of the great majority of the French people, the
+value of the _assignats_ was found, after the momentary spasm of fear
+had passed, not to have been permanently increased by these measures:
+on the contrary, this "fiat" paper persisted in obeying the natural
+laws of finance and, as new issues increased, their value decreased.
+Nor did the most lavish aid of nature avail.  The paper money of the
+nation seemed to possess a magic power to transmute prosperity into
+adversity and plenty into famine.  The year 1794 was exceptionally
+fruitful: and yet with the autumn came scarcity of provisions and with
+the winter came distress.  The reason is perfectly simple.  The
+sequences in that whole history are absolutely logical.  First, the
+Assembly had inflated the currency and raised prices enormously.
+Next, it had been forced to establish an arbitrary maximum price for
+produce.  But this price, large as it seemed, soon fell below the real
+value of produce; many of the farmers, therefore, raised less produce
+or refrained from bringing what they had to market.[60] But, as is
+usual in such cases, the trouble was ascribed to everything rather
+than the real cause, and the most severe measures were established in
+all parts of the country to force farmers to bring produce to market,
+millers to grind and shopkeepers to sell it.[61] The issues of paper
+money continued.  Toward the end of 1794 seven thousand millions in
+_assignats_ were in circulation.[62] By the end of May, 1795, the
+circulation was increased to ten thousand millions, at the end of
+July, to fourteen thousand millions; and the value of one hundred
+_francs_ in paper fell steadily, first to four _francs_ in gold, then
+to three, then to two and one-half.[63] But, curiously enough, while
+this depreciation was rapidly going on, as at various other periods
+when depreciation was rapid, there came an apparent revival of
+business.  The hopes of many were revived by the fact that in spite of
+the decline of paper there was an exceedingly brisk trade in all kinds
+of permanent property.  Whatever articles of permanent value certain
+needy people were willing to sell certain cunning people were willing
+to buy and to pay good prices for in _assignats_.  At this, hope
+revived for a time in certain quarters.  But ere long it was
+discovered that this was one of the most distressing results of a
+natural law which is sure to come into play under such circumstances.
+It was simply a feverish activity caused by the intense desire of a
+large number of the shrewder class to convert their paper money into
+anything and everything which they could hold and hoard until the
+collapse which they foresaw should take place.  This very activity in
+business simply indicated the disease.  It was simply legal robbery of
+the more enthusiastic and trusting by the more cold-hearted and keen.
+It was, the "unloading" of the _assignats_ upon the mass of the
+people.[64]
+
+Interesting is it to note in the midst of all this the steady action
+of another simple law in finance.  Prisons, guillotines, enactments
+inflicting twenty years' imprisonment in chains upon persons twice
+convicted of buying or selling paper money at less than its nominal
+value, and death upon investors in foreign securities, were powerless.
+The National Convention, fighting a world in arms and with an armed
+revolt on its own soil, showed titanic power, but in its struggle to
+circumvent one simple law of nature its weakness was pitiable.  The
+_louis d'or_ stood in the market as a monitor, noting each day, with
+unerring fidelity, the decline in value of the _assignat_; a monitor
+not to be bribed, not to be scared.  As well might the National
+Convention try to bribe or scare away the polarity of the mariner's
+compass.  On August 1, 1795, this gold _louis_ of 25 _francs_ was
+worth in paper, 920 _francs_; on September 1st, 1,200 _francs_; on
+November 1st, 2,600 _francs_; on December 1st, 3,050 _francs_.  In
+February, 1796, it was worth 7,200 _francs_ or one franc in gold was
+worth 288 _francs_ in paper.  Prices of all commodities went up nearly
+in proportion.[65] The writings of this period give curious details.
+Thibaudeau, in his Memoirs, speaks of sugar as 500 _francs_ a pound,
+soap, 230 _francs_, candles, 140 _francs_.  Mercier, in his lifelike
+pictures of the French metropolis at that period, mentions 600
+_francs_ as carriage hire for a single drive, and 6,000 for an entire
+day.  Examples from other sources are such as the following:--a
+measure of flour advanced from two _francs_ in 1790, to 225 _francs_
+in 1795; a pair of shoes, from five _francs_ to 200; a hat, from 14
+_francs_ to 500; butter, to, 560 _francs_ a pound; a turkey, to 900
+_francs_.[66] Everything was enormously inflated in price _except the
+wages of labor_.  As manufacturers had closed, wages had fallen, until
+all that kept them up seemed to be the fact that so many laborers were
+drafted off into the army.  From this state of things came grievous
+wrong and gross fraud.  Men who had foreseen these results and had
+gone into debt were of course jubilant.  He who in 1790 had borrowed
+10,000 _francs_ could pay his debts in 1796 for about 35 _francs_.
+Laws were made to meet these abuses.  As far back as 1794 a plan was
+devised for publishing official "tables of depreciation" to be used in
+making equitable settlements of debts, but all such machinery proved
+futile.  On the 18th of May, 1796, a young man complained to the
+National Convention that his elder brother, who had been acting as
+administrator of his deceased father's estate, had paid the heirs in
+_assignats_, and that he had received scarcely one three-hundredth
+part of the real value of his share.[67] To meet cases like this, a
+law was passed establishing a "scale of proportion."  Taking as a
+standard the value of the _assignat_ when there were two billions in
+circulation, this law declared that, in payment of debts, one-quarter
+should be added to the amount originally borrowed for every five
+hundred millions added to the circulation.  In obedience to this law a
+man who borrowed two thousand _francs_ when there were two billions in
+circulation would have to pay his creditors twenty-five hundred
+_francs_ when half a billion more were added to the currency, and over
+thirty-five thousand _francs_ before the emissions of paper reached
+their final amount.  This brought new evils, worse, if possible, than
+the old.[68]
+
+The question will naturally be asked, _On whom did this vast
+depreciation mainly fall at last_? When this currency had sunk to
+about one three-hundredth part of its nominal value and, after that,
+to nothing, in whose hands was the bulk of it? The answer is simple.
+I shall give it in the exact words of that thoughtful historian from
+whom I have already quoted: "Before the end of the year 1795 the paper
+money was almost exclusively in the hands of the working classes,
+employees and men of small means, whose property was not large enough
+to invest in stores of goods or national lands.[69] Financiers and men
+of large means were shrewd enough to put as much of their property as
+possible into objects of permanent value.  The working classes had no
+such foresight or skill or means.  On them finally came the great
+crushing weight of the loss.  After the first collapse came up the
+cries of the starving.  Roads and bridges were neglected; many
+manufactures were given up in utter helplessness."  To continue, in
+the words of the historian already cited: "None felt any confidence in
+the future in any respect; few dared to make a business investment for
+any length of time and it was accounted a folly to curtail the
+pleasures of the moment, to accumulate or save for so uncertain a
+future."[70]
+
+This system in finance was accompanied by a system in politics no less
+startling, and each system tended to aggravate the other.  The wild
+radicals, having sent to the guillotine first all the Royalists and
+next all the leading Republicans they could entrap, the various
+factions began sending each other to the same
+destination:--Hébertists, Dantonists, with various other factions and
+groups, and, finally, the Robespierrists, followed each other in rapid
+succession.  After these declaimers and phrase-mongers had thus
+disappeared there came to power, in October, 1795, a new
+government,--mainly a survival of the more scoundrelly,--the
+Directory.  It found the country utterly impoverished and its only
+resource at first was to print more paper and to issue even while wet
+from the press.  These new issues were made at last by the two great
+committees, with or without warrant of law, and in greater sums than
+ever.  Complaints were made that the array of engravers and printers
+at the mint could not meet the demand for _assignats_--that they could
+produce only from sixty to seventy millions per day and that the
+government was spending daily from eighty to ninety millions.  Four
+thousand millions of _francs_ were issued during one month, a little
+later three thousand millions, a little later four thousand millions,
+until there had been put forth over thirty-five thousand millions.
+The purchasing power of this paper having now become almost nothing,
+it was decreed, on the 22nd of December, 1795, that the whole amount
+issued should be limited to forty thousand millions, including all
+that had previously been put forth and that when this had been done
+the copper plates should be broken.  Even in spite of this, additional
+issues were made amounting to about ten thousand millions.  But on the
+18th of February, 1796, at nine o'clock in the morning, in the
+presence of a great crowd, the machinery, plates and paper for
+printing _assignats_ were brought to the Place Vendome and there, on
+the spot where the Napoleon Column now stands, these were solemnly
+broken and burned.
+
+Shortly afterward a report by Camus was made to the Assembly that the
+entire amount of paper money issued in less than six years by the
+Revolutionary Government of France had been over forty-five thousand
+millions of _francs_--that over six thousand millions had been
+annulled and burned and that at the final catastrophe there were in
+circulation close upon forty thousand millions.  It will be readily
+seen that it was fully time to put an end to the system, for the gold
+"_louis_" of twenty-five _francs_ in specie had, in February, 1796, as
+we have seen, become worth 7,200 _francs_, and, at the latest
+quotation of all, no less than 15,000 _francs_ in paper money--that
+is, one franc in gold was nominally worth 600 _francs_ in paper.
+
+Such were the results of allowing dreamers, schemers, phrase-mongers,
+declaimers and strong men subservient to these to control a
+government.[71]
+
+
+III.
+
+The first new expedient of the Directory was to secure a forced loan
+of six hundred million _francs_ from the wealthier classes; but this
+was found fruitless.  Ominous it was when persons compelled to take
+this loan found for an _assignat_ of one hundred _francs_ only one
+franc was allowed.  Next a National Bank was proposed; but capitalists
+were loath to embark in banking while the howls of the mob against all
+who had anything especially to do with money resounded in every city.
+At last the Directory bethought themselves of another expedient.  This
+was by no means new.  It had been fully tried on our continent twice
+before that time: and once, since--first, in our colonial period;
+next, during our Confederation; lastly, by the "Southern Confederacy"
+and here, as elsewhere, always in vain.  But experience yielded to
+theory--plain business sense to financial metaphysics.  It was
+determined to issue a new paper which should be "fully secured" and
+"as good as gold."
+
+Pursuant to this decision it was decreed that a new paper money "fully
+secured and as good as gold" be issued under the name of "_mandats_."
+In order that these new notes should be "fully secured," choice public
+real estate was set apart to an amount fully equal to the nominal
+value of the issue, and any one offering any amount of the _mandats_
+could at once take possession of government lands; the price of the
+lands to be determined by two experts, one named by the government and
+one by the buyer, and without the formalities and delays previously
+established in regard to the purchase of lands with _assignats_.
+
+Perhaps the most whimsical thing in the whole situation was the fact
+that the government, pressed as it was by demands of all sorts,
+continued to issue the old _assignats_ at the same time that it was
+discrediting them by issuing the new _mandats_.  And yet in order to
+make the _mandats_ "as good as gold" it was planned by forced loans
+and other means to reduce the quantity of _assignats_ in circulation,
+so that the value of each _assignat_ should be raised to one-thirtieth
+of the value of gold, then to make _mandats_ legal tender and to
+substitute them for _assignats_ at the rate of one for thirty.  Never
+were great expectations more cruelly disappointed.  Even before the
+_mandats_ could be issued from the press they fell to thirty-five per
+cent of their nominal value; from this they speedily fell to fifteen,
+and soon after to five per cent, and finally, in August, 1796, six
+months from their first issue, to three per cent.  This plan
+failed--just as it failed in New England in 1737; just as it failed
+under our own Confederation in 1781; just as it failed under the
+Southern Confederacy during our Civil War.[72]
+
+To sustain this new currency the government resorted to every method
+that ingenuity could devise.  Pamphlets suited to people of every
+capacity were published explaining its advantages.  Never was there
+more skillful puffing.  A pamphlet signed "Marchant" and dedicated to
+"People of Good Faith" was widely circulated, in which Marchant took
+pains to show the great advantage of the _mandats_ as compared with
+_assignats_,--how land could be more easily acquired with them; how
+their security was better than with _assignats_; how they could not,
+by any possibility, sink in values as the _assignats_ had done.  But
+even before the pamphlet was dry from the press the depreciation of
+the _mandats_ had refuted his entire argument.[73]
+
+The old plan of penal measures was again pressed.  Monot led off by
+proposing penalties against those who shall speak publicly against the
+_mandats_; Talot thought the penalties ought to be made especially
+severe; and finally it was enacted that any persons "who by their
+discourse or writing shall decry the _mandats_ shall be condemned to a
+fine of not less than one thousand _francs_ or more than ten thousand;
+and in case of a repetition of the offence, to four years in irons."
+It was also decreed that those who refused to receive the _mandats_
+should be fined,--the first time, the exact sum which they refuse; the
+second time, ten times as much; and the third time, punished with two
+years in prison.  But here, too, came in the action of those natural
+laws which are alike inexorable in all countries.  This attempt proved
+futile in France just as it had proved futile less than twenty years
+before in America.  No enactments could stop the downward tendency of
+this new paper "fully secured," "as good as gold"; the laws that
+finally govern finance are not made in conventions or congresses.[74]
+
+From time to time various new financial juggles were tried, some of
+them ingenious, most of them drastic.  It was decreed that all
+_assignats_ above the value of one hundred _francs_ should cease to
+circulate after the beginning of June, 1796.  But this only served to
+destroy the last vestige of, confidence in government notes of any
+kind.  Another expedient was seen in the decree that paper money
+should be made to accord with a natural and immutable standard of
+value and that one franc in paper should thenceforth be worth ten
+pounds of wheat.  This also failed.  On July 16th another decree
+seemed to show that the authorities despaired of regulating the
+existing currency and it was decreed that all paper, whether _mandats_
+or _assignats_, should be taken at its real value, and that bargains
+might be made in whatever currency people chose.  The real value of
+the _mandats_ speedily sank to about two per cent of their nominal
+value and the only effect of this legislation seemed to be that both
+_assignats_ and _mandats_ went still lower.  Then from February 4 to
+February 14, 1797, came decrees and orders that the engraving
+apparatus for the _mandats_ should be destroyed as that for the
+_assignats_ had been, that neither _assignats_ nor _mandats_ should
+longer be a legal tender and that old debts to the state might be paid
+for a time with government paper at the rate of one per cent of their
+face value.[75] Then, less than three months later, it was decreed
+that the twenty-one billions of _assignats_ still in circulation
+should be annulled.  Finally, on September 30, 1797, as the
+culmination of these and various other experiments and expedients,
+came an order of the Directory that the national debts should be paid
+two-thirds in bonds which might be used in purchasing confiscated real
+estate, and the remaining "Consolidated Third," as it was called, was
+to be placed on the "Great Book" of the national debt to be paid
+thenceforth as the government should think best.
+
+As to the bonds which the creditors of the nation were thus forced to
+take, they sank rapidly, as the _assignats_ and _mandats_ had done,
+even to three per cent of their value.  As to the "Consolidated
+Third," that was largely paid, until the coming of Bonaparte, in paper
+money which sank gradually to about six per cent of its face value.
+Since May, 1797, both _assignats_ and _mandats_ had been virtually
+worth nothing.
+
+So ended the reign of paper money in France.  The twenty-five hundred
+millions of _mandats_ went into the common heap of refuse with the
+previous forty-five thousand millions of _assignats_: the nation in
+general, rich and poor alike, was plunged into financial ruin from one
+end to the other.
+
+On the prices charged for articles of ordinary use light is thrown by
+extracts from a table published in 1795, reduced to American coinage.
+
+                           1790            1795
+For a bushel of flour    40 cents      45     dollars
+For a bushel of oats     18 cents      10     dollars
+For a cartload of wood    4 dollars   500     dollars
+For a bushel of coal      7 cents       2     dollars
+For a pound of sugar     18 cents      12 1/2 dollars
+For a pound of soap      18 cents       8     dollars
+For a pound of candles   18 cents       8     dollars
+For one cabbage           8 cents       5 1/2 dollars
+For a pair of shoes       1 dollar     40     dollars
+For twenty-five eggs     24 cents       5     dollars
+
+But these prices about the middle of 1795 were moderate compared with
+those which were reached before the close of that year and during the
+year following.  Perfectly authentic examples were such as the
+following:
+
+A pound of bread        9 dollars
+A bushel of potatoes   40 dollars
+A pound of candles     40 dollars
+A cartload of wood    250 dollars
+
+So much for the poorer people.  Typical of those esteemed wealthy may
+be mentioned a manufacturer of hardware who, having retired from
+business in 1790 with 321,000 _livres_, found his property in 1796
+worth 14,000 _francs_.[76]
+
+For this general distress arising from the development and collapse of
+"fiat" money in France, there was, indeed, one exception.  In Paris
+and a few of the other great cities, men like Tallien, of the
+heartless, debauched, luxurious, speculator, contractor and
+stock-gambler class, had risen above the ruins of the multitudes of
+smaller fortunes.  Tallien, one of the worst demagogue "reformers,"
+and a certain number of men like him, had been skillful enough to
+become millionaires, while their dupes, who had clamored for issues of
+paper money, had become paupers.
+
+The luxury and extravagance of the currency gamblers and their
+families form one of the most significant features in any picture of
+the social condition of that period.[77]
+
+A few years before this the leading women in French society showed a
+nobility of character and a simplicity in dress worthy of Roman
+matrons.  Of these were Madame Boland and Madame Desmoulins; but now
+all was changed.  At the head of society stood Madame Tallien and
+others like her, wild in extravagance, daily seeking new refinements
+in luxury, and demanding of their husbands and lovers vast sums to
+array them and to feed their whims.  If such sums could not be
+obtained honestly they must be had dishonestly.  The more closely one
+examines that period, the more clearly he sees that the pictures,
+given by Thibaudeau and Challamel and De Goncourt are not at all
+exaggerated.[78]
+
+The contrast between these gay creatures of the Directory period and
+the people at large was striking.  Indeed much as the vast majority of
+the wealthy classes suffered from impoverishment, the laboring
+classes, salaried employees of all sorts, and people of fixed income
+and of small means, especially in the cities, underwent yet greater
+distress.  These were found, as a rule, to subsist mainly on daily
+government rations of bread at the rate of one pound per person.  This
+was frequently unfit for food and was distributed to long lines of
+people, men, women and children, who were at times obliged to wait
+their turn even from dawn to dusk.  The very rich could, by various
+means, especially by bribery, obtain better bread, but only at
+enormous cost.  In May, 1796, the market price of good bread was, in
+paper, 80 _francs_ (16 dollars) per pound and a little later
+provisions could not be bought for paper money at any price.[79]
+
+And here it may be worth mentioning that there was another financial
+trouble especially vexatious.  While, as we have seen, such enormous
+sums, rising from twenty to forty thousand millions of _francs_ in
+paper, were put in circulation by the successive governments of the
+Revolution, enormous sums had been set afloat in counterfeits by
+criminals and by the enemies of France.  These came not only from
+various parts of the French Republic but from nearly all the
+surrounding nations, the main source being London.  Thence it was that
+Count Joseph de Puisaye sent off cargoes of false paper, excellently
+engraved and printed, through ports in Brittany and other disaffected
+parts of France.  One seizure by General Hoche was declared by him to
+exceed in nominal value ten thousand millions of _francs_.  With the
+exception of a few of these issues, detection was exceedingly
+difficult, even for experts; for the vast majority of the people it
+was impossible.
+
+Nor was this all.  At various times the insurgent royalists in La
+Vendee and elsewhere put _their_ presses also in operation, issuing
+notes bearing the Bourbon arms,--the _fleur-de-lis_, the portrait of
+the Dauphin (as Louis XVII) with the magic legend "_De Par le Roi_,"
+and large bodies of the population in the insurgent districts were
+_forced_ to take these.  Even as late as 1799 these notes continued to
+appear.[80]
+
+The financial agony was prolonged somewhat by attempts to secure funds
+by still another "forced loan," and other discredited measures, but
+when all was over with paper money, specie began to reappear--first in
+sufficient sums to do the small amount of business which remained
+after the collapse.  Then as the business demand increased, the amount
+of specie flowed in from the world at large to meet it and the nation
+gradually recovered from that long paper-money debauch.
+
+Thibaudeau, a very thoughtful observer, tells us in his Memoirs that
+great fears were felt as to a want of circulating medium between the
+time when paper should go out and coin should come in; but that no
+such want was severely felt--that coin came in gradually as it was
+wanted.[81]
+
+Nothing could better exemplify the saying of one of the most shrewd of
+modern statesmen that "There will always be money."[82]
+
+But though there soon came a degree of prosperity--as compared with
+the distress during the paper-money orgy, convalescence was slow.  The
+acute suffering from the wreck and rain brought by _assignats_,
+_mandats_ and other paper currency in process of repudiation lasted
+nearly ten years, but the period of recovery lasted longer than the
+generation which followed.  It required fully forty years to bring
+capital, industry, commerce and credit up to their condition when the
+Revolution began, and demanded a "man on horseback," who established
+monarchy on the ruins of the Republic and thew away millions of lives
+for the Empire, to be added to the millions which had been sacrificed
+by the Revolution.[83]
+
+Such, briefly sketched in its leading features, is the history of the
+most skillful, vigorous and persistent attempt ever made to substitute
+for natural laws in finance the ability of legislative bodies, and,
+for a standard of value recognized throughout the world, a national
+standard devised by theorists and manipulated by schemers.  Every
+other attempt of the same kind in human history, under whatever
+circumstances, has reached similar results in kind if not in degree;
+all of them show the existence of financial laws as real in their
+operation as those which hold the planets in their courses.[84]
+
+I have now presented this history in its chronological order--the
+order of events: let me, in conclusion, sum it up, briefly, in its
+_logical_ order,--the order of cause and effect.
+
+And, first, in the economic department.  From the early reluctant and
+careful issues of paper we saw, as an immediate result, improvement
+and activity in business.  Then arose the clamor for more paper money.
+At first, new issues were made with great difficulty; but, the dyke
+once broken, the current of irredeemable currency poured through; and,
+the breach thus enlarging, this currency was soon swollen beyond
+control.  It was urged on by speculators for a rise in values; by
+demagogues who persuaded the mob that a nation, by its simple fiat,
+could stamp real value to any amount upon valueless objects.  As a
+natural consequence a great debtor class grew rapidly, and this class
+gave its influence to depreciate more and more the currency in which
+its debts were to be paid.[85]
+
+The government now began, and continued by spasms to grind out still
+more paper; commerce was at first stimulated by the difference in
+exchange; but this cause soon ceased to operate, and commerce, having
+been stimulated unhealthfully, wasted away.
+
+Manufactures at first received a great impulse; but, ere long, this
+overproduction and overstimulus proved as fatal to them as to
+commerce.  From time to time there was a revival of hope caused by an
+apparent revival of business; but this revival of business was at last
+seen to be caused more and more by the desire of far-seeing and
+cunning men of affairs to exchange paper money for objects of
+permanent value.  As to the people at large, the classes living on
+fixed incomes and small salaries felt the pressure first, as soon as
+the purchasing power of their fixed incomes was reduced.  Soon the
+great class living on wages felt it even more sadly.
+
+Prices of the necessities of life increased: merchants were obliged to
+increase them, not only to cover depreciation of their merchandise,
+but also to cover their risk of loss from fluctuation; and, while the
+prices of products thus rose, wages, which had at first gone up, under
+the general stimulus, lagged behind.  Under the universal doubt and
+discouragement, commerce and manufactures were checked or destroyed.
+As a consequence the demand for labor was diminished; laboring men
+were thrown out of employment, and, under the operation of the
+simplest law of supply and demand, the price of labor--the daily wages
+of the laboring class--went down until, at a time when prices of food,
+clothing and various articles of consumption were enormous, wages were
+nearly as low as at the time preceding the first issue of irredeemable
+currency.
+
+The mercantile classes at first thought themselves exempt from the
+general misfortune.  They were delighted at the apparent advance in
+the value of the goods upon their shelves.  But they soon found that,
+as they increased prices to cover the inflation of currency and the
+risk from fluctuation and uncertainty, purchases became less in amount
+and payments less sure; a feeling of insecurity spread throughout the
+country; enterprise was deadened and stagnation followed.
+
+New issues of paper were then clamored for as more drams are demanded
+by a drunkard.  New issues only increased the evil; capitalists were
+all the more reluctant to embark their money on such a sea of doubt.
+Workmen of all sorts were more and more thrown out of employment.
+Issue after issue of currency came; but no relief resulted save a
+momentary stimulus, which aggravated the disease.  The most ingenious
+evasions of natural laws in finance which the most subtle theorists
+could contrive were tried--all in vain; the most brilliant substitutes
+for those laws were tried; "self-regulating" schemes,
+"interconverting" schemes--all equally vain.[86] All thoughtful men
+had lost confidence.  All men were _waiting_; stagnation became worse
+and worse.  At last came the collapse and then a return, by a fearful
+shock, to a state of things which presented something like certainty
+of remuneration to capital and labor.  Then, and not till then, came
+the beginning of a new era of prosperity.
+
+Just as dependent on the law of cause and effect was the _moral_
+development.  Out of the inflation of prices grew a speculating class;
+and, in the complete uncertainty as to the future, all business became
+a game of chance, and all business men, gamblers.  In city centers
+came a quick growth of stock-jobbers and speculators; and these set a
+debasing fashion in business which spread to the remotest parts of the
+country.  Instead of satisfaction with legitimate profits, came a
+passion for inordinate gains.  Then, too, as values became more and
+more uncertain, there was no longer any motive for care or economy,
+but every motive for immediate expenditure and present enjoyment.  So
+came upon the nation the _obliteration of thrift_.  In this mania for
+yielding to present enjoyment rather than providing for future comfort
+were the seeds of new growths of wretchedness: luxury, senseless and
+extravagant, set in: this, too, spread as a fashion.  To feed it,
+there came cheatery in the nation at large and corruption among
+officials and persons holding trusts.  While men set such fashions in
+private and official business, women set fashions of extravagance in
+dress and living that added to the incentives to corruption.  Faith in
+moral considerations, or even in good impulses, yielded to general
+distrust.  National honor was thought a fiction cherished only by
+hypocrites.  Patriotism was eaten out by cynicism.
+
+Thus was the history of France logically developed in obedience to
+natural laws; such has, to a greater or less degree, always been the
+result of irredeemable paper, created according to the whim or
+interest of legislative assemblies rather than based upon standards of
+value permanent in their nature and agreed upon throughout the entire
+world.  Such, we may fairly expect, will always be the result of them
+until the fiat of the Almighty shall evolve laws in the universe
+radically different from those which at present obtain.[87]
+
+And, finally, as to the general development of the theory and practice
+which all this history records: my subject has been Fiat Money in
+France; How it came; What it brought; and How it ended.
+
+It came by seeking a remedy for a comparatively small evil in an evil
+infinitely more dangerous.  To cure a disease temporary in its
+character, a corrosive poison was administered, which ate out the
+vitals of French prosperity.
+
+It progressed according to a law in social physics which we may call
+the "_law of accelerating issue and depreciation._" It was
+comparatively easy to refrain from the first issue; it was exceedingly
+difficult to refrain from the second; to refrain from the third and
+those following was practically impossible.
+
+It brought, as we have seen, commerce and manufactures, the mercantile
+interest, the agricultural interest, to ruin.  It brought on these the
+same destruction which would come to a Hollander opening the dykes of
+the sea to irrigate his garden in a dry summer.
+
+It ended in the complete financial, moral and political prostration of
+France-a prostration from which only a Napoleon could raise it.
+
+But this history would be incomplete without a brief sequel, showing
+how that great genius profited by all his experience.  When Bonaparte
+took the consulship the condition of fiscal affairs was appalling.
+The government was bankrupt; an immense debt was unpaid.  The further
+collection of taxes seemed impossible; the assessments were in
+hopeless confusion.  War was going on in the East, on the Rhine, and
+in Italy, and civil war, in La Vendée.  All the armies had long been
+unpaid, and the largest loan that could for the moment be effected was
+for a sum hardly meeting the expenses of the government for a single
+day.  At the first cabinet council Bonaparte was asked what he
+intended to do.  He replied, "I will pay cash or pay nothing."  From
+this time he conducted all his operations on this basis.  He arranged
+the assessments, funded the debt, and made payments in cash; and from
+this time--during all the campaigns of Marengo, Austerlitz, Jena,
+Eylau, Friedland, down to the Peace of Tilsit in 1807--there was but
+one suspension of specie payment, and this only for a few days.  When
+the first great European coalition was formed against the Empire,
+Napoleon was hard pressed financially, and it was proposed to resort
+to paper money; but he wrote to his minister, "While I live I will
+never resort to irredeemable paper."  He never did, and France, under
+this determination, commanded all the gold she needed.  When Waterloo
+came, with the invasion of the Allies, with war on her own soil, with
+a change of dynasty, and with heavy expenses for war and indemnities,
+France, on a specie basis, experienced no severe financial distress.
+
+If we glance at the financial history of France during the
+Franco-Prussian War and the Communist struggle, in which a far more
+serious pressure was brought upon French finances than our own recent
+Civil War put upon American finance, and yet with no national
+stagnation or distress, but with a steady progress in prosperity, we
+shall see still more clearly the advantage of meeting a financial
+crisis in an honest and straightforward way, and by methods sanctioned
+by the world's most costly experience, rather than by yielding to
+dreamers, theorists, phrase-mongers, declaimers, schemers, speculators
+or to that sort of, "Reform" which is "the last refuge of a
+scoundrel."[88]
+
+There is a lesson in all this which it behooves every thinking man to
+ponder.
+
+
+NOTES
+
+
+Note: The White Collection at the Cornell University library mentioned
+in many of the following notes is described here:
+
+http://rmc.library.cornell.edu/collections/subjects/frrev.html
+
+[1] A paper read before a meeting of Senators and Members of the House
+of Representatives of both political parties, at Washington, April
+12th, and before the Union League Club, at New York, April 13th, 1876,
+and now (1914) revised and extended.
+
+[2] For proof that the financial situation of France at that time was
+by no means hopeless, see Storch, "Economie Politique," vol. iv,
+p. 159.
+
+[3] See Moniteur, sitting of April 10, 1790.
+
+[4] Ibid., sitting of April 15, 1790.
+
+[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 whole history,
+see the full set of his "L'ami du peuple" in the President White
+Collection of the Cornell University.  For Bergasse's pamphlet and a
+mass of similar publications, see the same collection.  For the effect
+produced by them, see Challamel, "Les Français sous la Révolution";
+also De Goncourt, "La Société Française pendant la Révolution,"
+&c.
+
+For the Report referred to, see Levasseur, "Histoire des classes
+ouvriès 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 in such estimates, sets the total value of church
+property at two thousand millions; other authorities put it as high as
+twice that sum.  See especially Taine, liv. ii, ch. I., who gives the
+valuation as "about four milliards."  Sybel, "Gesch. der
+Revolutionszeit," gives it as two milliards and Briand, "La
+séparation" &c., agrees with him.  See also De Nerve, "Finances
+Françaises," vol. ii, pp. 236-240; also Alison, "History of Europe,"
+vol. i.
+
+[6] For striking pictures of this feeling among the younger generation
+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,
+also Thiers, "Histoire de Law"; also Levasseur, op. cit. Liv. i.,
+chap. VI.  Several specimens of John Law's paper currency are to be
+found in the White Collection in the Library of Cornell
+University,--some, numbered with enormous figures.
+
+[7] See Buchez and Roux, "Histoire Parlementaire," vol. v, p. 321, et
+seq.  For an argument to prove that the _assignats_ were, after all,
+not so well secured as John Law's money, see Storch, "Economie
+Politique," vol. iv, p. 160.
+
+[8] For specimens of this first issue and of nearly every other issue
+during the French Revolution, see the extensive collection of
+originals in the Cornell University Library.  For a virtually complete
+collection of photographic copies, see Dewamin, "Cent ans de
+numismatique française," vol. i, passim.
+
+[9] See "Addresse de l'Assemblée nationals sur lea emissions
+_d'assignats_ monnaies," p. 5.
+
+[10] Ibid., p. 10.
+
+[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.
+
+[12] Von Sybel, "History of the French Revolution," vol. i, p. 252;
+also Levasseur, as above, pp. 137 and following.
+
+[13] For Mirabeau's real opinion on irredeemable paper, see his letter
+to Cerutti, in a leading article of the "Moniteur"; also "Mèmoires do
+Mirabeau," vol. vii, pp. 23, 24 and elsewhere.  For his pungent
+remarks above quoted, see Levasseur, ibid., vol. i, p. 118.
+
+[14] See "Moniteur," August 27, 1790.
+
+[15] "Moniteur," August 28, 1790; also Levasseur, as above, pp. 139
+_et seq_.
+
+[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.
+
+[17] "Moniteur," August 29, 1790.
+
+[18] See Lacretelle, "18me Siécle," vol. viii, pp. 84-87; also Thiers
+and Mignet.
+
+[19] See Hatin, Histoire de la Presse en France, vols. v and vi.
+
+[20] See "Moniteur," Sept. 5, 6 and 20, 1790.
+
+[21] See Levasseur, vol. i, p. 142.
+
+[22] See speech in "Moniteur"; also in Appendix to Thiers' "History of
+the French Revolution."
+
+[23] See Levassear, "Classes ouvrières," etc., vol. i, p. 149.
+
+[24] See Levasseur, pp. 151 et seq.  Various examples of these
+"confidence bills" are to be seen in the Library of Cornell
+University.
+
+[25] See Levasseur, vol. i, pp. 155-156.
+
+[26] See Von Sybel, "History of the Revolution," vol. i, p. 265; also
+Levasseur, as above, vol. i, pp. 152-160.
+
+[27] For Turgot's argument against "fiat money" theory, see A. D.
+White, "Seven Great Statesmen in the Warfare of Humanity with
+Unreason," article on Turgot, pp. 169, et seq.
+
+[28] See De Goncourt, Société française," for other explanations;
+"Les Révolutions de Paris," vol. ii, p. 216; Challamel, "Les
+Français sous la Révolution"; Senior, "On Some Effects of Paper
+Money," 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, et seq. (Dec. 4-24, 1795.)
+
+[29] For statements and illustration of the general action of this
+law, see Sumner, "History of American Currency," pp. 157, 158; also
+Jevons, on "Money," p. 80.
+
+[30] See De Goncourt, "Société Française," p. 214.
+
+[31] See Von Sybel, History of the French Revolution, vol. 1, pp.
+281, 283.
+
+[32] For proofs that issues of irredeemable paper at first stimulated
+manufactures and commerce in Austria and afterward ruined them, see
+Storch's "Economie politique," vol. iv, p. 223, note; and for the same
+effect produced by the same causes in Russia, see ibid., end of
+vol. iv.  For the same effects in America, see Sumner's "History of
+American Currency."  For general statement of effect of inconvertible
+issues on foreign exchanges see McLeod on "Banking," p. 186.
+
+[33] See Louis Blanc, "Histoire de la Révolution," tome xii, p. 113.
+
+[34] See "Extrait du registre des délibérations de la section de la
+bibliothèque," May 3, 1791, pp. 4, 5.
+
+[35] Von Sybel, vol. i, p. 273.
+
+[36] For general account, see Thiers' "Révolution," chap. xiv; also
+Lacretelle, vol. viii, p. 109; also "Memoirs of Mallet du Pan."  For a
+good account of the intrigues between the court and Mirabeau and of
+the prices paid him, see Reeve, "Democracy and Monarchy in France,"
+vol. i, pp. 213-220.  For a very striking caricature published after
+the iron chest in the Tuileries was opened and the evidences of
+bribery of Mirabeau fully revealed, see Challamel, "Musée," etc. Vol.
+i, p. 341, is represented as a skeleton sitting on a pile of letters,
+holding the French crown in one hand and a purse of gold in the other.
+
+[37] Thiers, chap. ix.
+
+[38] For this and other evidences of steady decline in the purchasing
+power of the _assignats_, see Caron, "Tableaux de Dépréciation du
+papier-monnaie," Paris, 1909, p. 386.
+
+[39] See especially "Discours de Fabre d'Eglantine," in "Moniteur" for
+August 11, 1793; also debate in "Moniteur" of September 15, 1793; also
+Prudhomme's "Révolutions de Paris."  For arguments of much the same
+tenor, see vast numbers of pamphlets, newspaper articles and speeches
+during the "Greenback Craze,"--and the craze for unlimited coinage of
+silver,--in the United States.
+
+[40] See Caron, "Tableaux de Dépréciation," as above, p. 386.
+
+[41] Von Sybel, vol. i, pp. 509, 510, 515; also Villeneuve Bargemont,
+"Histoire de l'Economie Politique," vol. ii, p. 213.
+
+[42] As to the purchasing power of money at that time, see Arthur
+Young, "Travels in France during the Years 1787, 1788 and 1789."  For
+notices of the small currency with examples of satirical verses
+written regarding it, see Challamel, "Les français sous la
+Révolution," pp. 307, 308.  See also Mercier, "Le Nouveau Paris,"
+edition of 1800, chapter ccv., entitled "Parchemin Monnaie." A series
+of these petty notes will be found in the White collection of the
+Cornell University Library.  They are very dirty and much worn, but
+being printed on parchment, remain perfectly legible.  For issue of
+quarter-"_sou_" pieces see Levasseur, p. 180.
+
+[43] See Levasseur, vol. i, p. 176.
+
+[44] For Chaumette's brilliant display of fictitious reasons for the
+decline see Thiers, Shoberl's translation, published by Bentley, vol.
+iii, p. 248.
+
+[45] For these fluctuations, see Caron, as above, p. 387.
+
+[46] One of the Forced Loan certificates will be found in the White
+Collection in the Library of Cornell University.
+
+[47] For details of these transactions, see Levasseur, as above,
+vol. i, chap. 6, pp. 181, et seq.  Original specimens of these notes,
+bearing the portrait of Louis XVI will be found in the Cornell
+University Library (White Collection) and for the whole series
+perfectly photographed in the same collection, Dewarmin, "Cent ans de
+numismatique française," vol. i, pp. 143-165.
+
+[48] For statements showing the distress and disorder that forced the
+Convention to establish the "_Maximum_" see Levasseur, vol. i, pp.
+188-193.
+
+[49] See Levasseur, as above, vol. i, pp. 195-225.
+
+[50] See specimens of these tickets in the White Collection in the
+Cornell Library.
+
+[51] For these condemnations to the guillotine see the officially
+published trials and also the lists of the condemned, in the White
+Collection, also the lists given daily in the "Moniteur." For the spy
+system, see Levasseur, vol. i, p. 194.
+
+[52] See Levasseur, as above, vol. i, p. 186.  For an argument to show
+that the Convention was led into this Draconian legislation, not by
+necessity, but by its despotic tendencies, see Von Sybel's "History of
+the French Revolution," vol. iii, pp. 11, 12.  For general statements
+of theories underlying the "_Maximum_," see Thiers; for a very
+interesting picture, by an eye-witness, of the absurdities and
+miseries it caused, see Mercier, "Nouveau Paris," edition of 1800,
+chapter XLIV.
+
+[53] For a summary of the report of the Committee, with list of
+articles embraced under it, and for various interesting details, see
+Villeneuve Bargemont, "Histoire de l'Economie Politique," vol. ii,
+pp. 213-239; also Levasseur, as above.  For curious examples of severe
+penalties for very slight infringements on the law on the subject, see
+Louis Blanc, "Histoire de la Révolution française," tome x, p. 144.
+For Louis XIVth's claim see "Memoirs of Louis XIV for the Instruction
+of the Dauphin."
+
+For a simple exposition of the way in which the exercise of this power
+became simply confiscation of all private property in France, see
+Mallet Du Pan's "Memoirs," London, 1852, vol. ii, p. 14.
+
+[54] See Du Pont's arguments, as given by Levasseur.
+
+[55] Louis Blanc calls attention to this very fact in showing the
+superiority of the French _assignats_ to the old American Continental
+currency, See his "Histoire de la Révolution française," tome xii,
+p.  98.
+
+[56] See Sumner, as above, p. 220.
+
+[57] See Levasseur, as above, vol. i, p. 178.
+
+[58] See Cambon's "Report," Aug. 15, 1793, pp. 49-60; also, "Decree of
+Aug. 24, 1793," sec. 31, chapters XCVI-CIII.  Also, "Tableaux de la
+dépréciation de papier monnaie dans le department de la Seine."
+
+[59] For the example of Metz and other authorities, see Levasseur, as
+above, vol. i, p. 180.
+
+[60] See Von Sybel, vol. iii, p. 173.
+
+[61] See Thiers; also, for curious details of measures taken to compel
+farmers and merchants, see Senior, Lectures on "Results of Paper
+Money," pp. 86, 87.
+
+[62] See Von Sybel, vol. iv, p. 231.
+
+[63] See Von Sybel, vol. iv, p. 330; also tables of depreciation in
+"Moniteur"; also official reports in the White Collection; also
+Caron's "Tables," etc.
+
+[64] For a lifelike sketch of the way in which these exchanges of
+_assignats_ for valuable property went on at periods of the rapid
+depreciation of paper, see Challamel, "Les français sous la
+Révolution," p. 309; also Say, "Economic Politique."
+
+[65] For a very complete table of the depreciation from day to day,
+see "Supplement to the Moniteur" of October 2, 1797; also Caron, as
+above.  For the market prices of the _louis d'or_ at the first of
+every month, as the collapse approached, see Montgaillard.  See also
+"Official Lists" in the White Collection.  For a table showing the
+steady rise of the franc in gold during a single week, from 251 to 280
+_francs_, see Dewarmin, as above, vol. i, p. 136.
+
+[66] See "Mèmoires de Thibaudeau," vol. ii, p. 26, also Mercier, "Lo
+Nouveau Paris," vol. ii, p. 90; for curious example of the scales of
+depreciation see the White Collection.  See also extended table of
+comparative values in 1790 and 1795.  See Levasseur, as above, vol. i,
+pp. 223-4.
+
+[67] For a striking similar case in our own country, see Sumner,
+"History of American Currency, " p. 47.
+
+[68] See Villeneuve Bargemont, "Histoire de l'économie politique,"
+vol. ii, p. 229.
+
+[69] See Von Sybel, vol. iv, pp. 337, 338.  See also for confirmation
+Challamel, "Histoire Musée," vol. ii, p. 179.  For a thoughtful
+statement of the reasons why such paper was not invested in lands by
+men of moderate means, and workingmen, see Mill, "Political Economy,"
+vol. ii, pp. 81, 82.
+
+[70] See Von Sybel, vol. iv, p. 222.
+
+[71] See especially Levasseur, "Histoire des classes ouvrières," etc.
+vol. i, pp. 219, 230 and elsewhere; also De Nervo, "Finance
+française," p. 280; also Stourm, as already cited.  The exact amount
+of _assignats_ in circulation at the final suppression is given by
+Dowarmin, (vol. i, p. 189), as 39,999,945,428 _livres_ or _francs_.
+
+[72] For details of the mandat system very thoroughly given, see
+Thiers' "History of the French Revolution," Bentley's edition, vol.
+iv, pp. 410-412.  For the issue of _assignats_ and _mandats_ at the
+same time, see Dewarmin, vol. i, p. 136; also Levasseur, vol. i, pp.
+230-257.  For an account of "new tenor bills" in America and their
+failure in 1737, see Summer, pp. 27-31; for their failure in 1781, see
+Morse, "Life of Alexander Hamilton," vol. i, pp. 86, 87.  For similar
+failure in Austria, see Summer, p. 314.
+
+[73] See Marchant, "Lettre aux gens de bonne foi."
+
+[74] See Summer, p. 44; also De Nervo, "Finances françaises," p. 282.
+
+[75] See De Nervo, "Finances françaises," p. 282; also Levasseur,
+vol. i, p. 236 et seq.
+
+[76] See Table from "Gazette de France" and extracts from other
+sources in Levasseur, vol. i, pp. 223-4.
+
+[77] Among the many striking accounts of the debasing effects of
+"inflation" upon France under the Directory perhaps the best is that
+of Lacretelle, vol. xiii, pp. 32-36.  For similar effect, produced by
+the same cause in our own country in 1819, see statement from Niles'
+"Register," in Sumner, p. 80.  For the jumble of families reduced to
+beggary with families lifted into sudden wealth and for the mass of
+folly and misery thus mingled, see Levassour, vol. i, p. 237.
+
+[78] For Madame Tallien and luxury of the stock-gambler classes, see
+Challamel, "Les français sous la Révolution," pp. 30, 33; also De
+Goncourt, "Les français sous le Directoire." Regarding the outburst
+of vice in Paris and the demoralization of the police, see Levasseur,
+as above.
+
+[79] See Levasseur, Vol. i, p. 237, et seq.
+
+[80] For specimens of counterfeit _assignats_, see the White
+Collection in the Cornell University Library, but for the great series
+of various issues of them in fac-simile, also for detective warnings
+and attempted descriptions of many varieties of them, and for the
+history of their Issue, see especially Dewarmin, vol. i, pp. 152-161.
+For photographic copies of Royalist _assignats_, etc., see also
+Dewarmin, ibid., pp. 192-197, etc.  For a photograph of probably the
+last of the Royalist notes ever issued, bearing the words "Pro Deo,
+pro Rege, pro Patria" and "Armée Catholique et Royale" with the date
+1799, and for the sum of 100 _livres_, see Dewarmin, vol. i, p. 204.
+
+[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.
+
+[82] See Thiers.
+
+[83] See Levasseur, vol. i, p. 246.
+
+[84] For examples of similar effects in Russia, Austria and Denmark,
+see Storch, "Economie Politique," vol. iv; for similar effects in the
+United States, see Gouge, "Paper Money and Banking in the United
+States," also Summer, "History of American Currency." For working out
+of the same principles in England, depicted in a masterly way, see
+Macaulay, "History of England," chap. xxi; and for curious exhibition
+of the same causes producing same results in ancient Greece, see a
+curious quotation by Macaulay in same chapter.
+
+[85] For parallel cases in the early history of our own country, see
+Sumner, p. 21, and elsewhere.
+
+[86] For a review of some of these attempts, with eloquent statement
+of their evil results, see "Mémoires de Durand de Maillane," pp.
+166-169.
+
+[87] For similar effect of inflated currency in enervating and
+undermining trade, husbandry, manufactures and morals in our own
+country, see Daniel Webster, cited in Sumner, pp. 45-50.  For similar
+effects in other countries, see Senior, Storch, Macaulay and others
+already cited.
+
+[88] For facts regarding French finance under Napoleon I am indebted
+to Hon. David A. Wells.  For more recent triumphs of financial
+commonsense in France, see Bonnet's articles, translated by the late
+George Walker, Esq.  For general subject, see Levasseur.
+
+
+
+THE BANK OF NEW YORK, established in 1784, was the only Bank in
+existence in the city of New York at the time of the French experiment
+with fiat money.
+
+THE BANK OF NEW YORK AND TRUST COMPANY, which celebrates its
+one-hundred and fiftieth anniversary in March, 1934, considers it a
+privilege to be able to distribute some copies of this scholarly
+article of the late Andrew D. White.  The article emphasizes the fact
+that the use of fiat money in France was in its beginning a sincere
+effort on the part of intelligent members of the National Assembly to
+stem the tide of misery and wretchedness which had brought about the
+Revolution in 1789.  But the article also shows clearly that once
+started on a small scale, it became utterly impossible to control the
+currency inflation and that after some slight indications of
+improvement in conditions, the situation went from bad to worse.  In
+the long run, those most injured were the people whom it was most
+desired to help--the laborer, the wage earner and those whose incomes
+from previous savings were smallest.
+
+ANDREW D. WHITE had a long and distinguished career as educator,
+historian, economist and diplomat; his description of the events in
+France that followed the experiment with fiat money is intensely
+interesting and well Worth the attention of every thinking person in
+the United States of 1933.
+
+
+
+
+*** END OF THE PROJECT GUTENBERG EBOOK, FIAT MONEY INFLATION IN FRANCE ***
+
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