Fiat Money Inflation in France: How it Came, What it Brought, and How it EndedWhite, Andrew Dickson
History
Fiat Money Inflation in France: How it Came, What it Brought, and How it Ended
White, Andrew Dickson
Assignats; Inflation (Finance) -- France -- History
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.
Public-domain text, read in full here on John Shaqi.
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