The French Assignats.
--"History," says Lord Bolingbroke, "is philosophy teaching by example." Unfortunately, few men are philosophers, and still fewer will be taught wisdom by example, or by anything else short of actual experience.
It is the duty, nevertheless, of all independent journalists, when the country is in a crisis to refresh the memories of statesmen, or at least the mass, whose united thoughts constitute what is called public opinion, by presenting parallel examples drawn from the pages of history.
In other words, it is their duty to point out the beacon, and leave it to others to heed the warning, or to carry the ship among the breakers, as may best suit their ideas of expediency.
We shall endeavor in this article to give a short history of the rise, progress, and catastrophe of the paper issued by the several revolutionary Governments of
France, between the years 1790 and 1797, as illustrating more completely than any other event in history the dangers of an inflated currency, and the absolute necessity of finding some means to reduce the volume when it has become thus inflated, under pain of absolute and irretrievable national bankruptcy.
Three most important papers have been lately published by officers high in the favor of the
Government and the estimation of the country, upon the subject of our financial condition.
We allude of course to the letters of
Mr. Memminger to
Mr. Hunter, and the statement of
Mr. Tyler, Register of the Treasury.
Mr. Memminger tells
Mr. Hunter that $150,000,000 currency is as much as the whole Confederacy on both sides of the
Mississippi can bear, (not as much as it
requires, observe, but as much as it can stand up under;) that he has set that sam afloat in the countries west of the
Mississippi, (that is, he has given them a currency whose volume is equal to the capacity of endurance possessed by the whole Confederacy;) that on this side of the
Mississippi the currency is $392,000,000 and a fraction, being double as much as the whole Confederacy, including the States west of the
Mississippi is capable of enduring.
The whole currency on both sides of the
Mississippi he therefore estimates at $452,000,000.
Mr. Tyler makes a larger estimate than
Mr. Memminger, stating the amount of Treasury notes heretofore issued at $624,000,000, and the outstanding circulation at $497,000,000, after deducting $126,000,000, which have been funded, and about a million more which have been cancelled.
This discrepancy has no bearing whatever upon our purpose, which is to show, from the example of another country, what must be the consequence if some means, more stringent than any which have yet been applied, be not adopted to retire the superfluous portion of this enormous circulation.
The debt of
France in 1787 was about three milliards of francs, or about $600,000,000. The deplorable state of the finances, and the inability of the
Government to pay the interest of this debt occasioned the assembling of the
Tiers Etta, and the meeting of that body, was the commencement of the revolution.
In April, 1790, the
Government so far from having extinguished any of the debt, had increased it by 1,250,000,000 francs; that is, about $250,000,000. In casting about for means,
Talleyrand, himself a renegade priest, proposed to take into possession the property of the church, which constituted nearly half the
real estate of the kingdom.
In spite of violent opposition this measure was carried, --the immediate sale of church property to the amount of 400,000,000 francs, or $80,000,000, was ordered for the benefit of the
State--and the further conduct of the affair turned over to the municipalities, who had become the purchasers in the first instance.
Not doubting that they should be able to meet their engagements by means of secondary sale, the municipality of
Paris issued promissory notes to a large amount, and all the other municipalities followed their example, so that the whole amount of the notes thus issued soon reached the value of the whole amount of property confiscated.
When the secondary sales took place, they were entirely disappointed in the results, and the
Government took the burden off their shoulders by issuing its own promissory notes, and with them taking up the notes of the municipalities.
Such was the origin of the Assignats.
They at first bore an interest of four per cent., but in subsequent issues lost that feature.
For a short time, they passed at par with coin; but the
Convention, which by this time had succeeded to the power of its predecessors, the Constituent and National Assemblies, finding it impossible to raise the requisite sums by the sales of church property, issued fresh batches, which caused an immediate depreciation.
Commodities, of course, rose with the depreciation of the paper.
Labor, which could before the revolution be procured for a single franc, now cost ten.
The farmers, of course, charged ten times as much for their products, and the butchers and bakers rose in proportion.
This caused a furious commotion in
Paris, the people attributing to speculators and forestallers the natural and inevitable consequences of a depreciated currency.
To remedy the evil the
Convention passed a law that the butchers and bakers should sell at the old prices — that is, should sell their commodities at the same rate that they were sold when they had to give only one tenth of the existing prices for them in their original state.
Of course these unfortunate men, seeing that they must be inevitably ruined, would have shut up shop if they could; but the
Convention were beforehand with them, and made it a capital offence for them to discontinue business.
At the same time they fixed a
maximum upon all the products of the earth, and prescribed the guillotine as the punishment for any one who should sell an assignat for less than its nominal value in coin.
In the meantime the
printing-press kept at work night and day. During the Reign of Terror, which lasted but eighteen months, paper of the nominal value of seven milliards and a half of francs ($1,500,000,000) was issued.
The farmers were all ruined by the maximum.
Every man was afraid of the paper money, and as fast as he accumulated it passed it to the
Government, and took
real estate in exchange.
In this way half the landed property of the kingdom changed hands.
By the time of the overthrow of Robespierre, the currency had fallen so low that
General Pichegru commuted his pay, which was nominally 4,000 francs, or $800 a month, for $40; and
General Hoche, at the head of an army of 100,000 men, wrote to the Directory to beg that they would send him a horse, for he had none, and could not buy one with the paper money.
At last, in 1797, when the public debt had reached fifty millions of francs, or about $10,000,000,000 a decree of national bankruptcy was passed — that is to say, the whole debt was repudiated.
We have taken the pains to write this short sketch for the sake of the example.
The great mistake of the
French financiers consisted in having devised no means to retire their enormous issues.--Once out, they could not be redeemed, save by the sale of the public domain, which was soon found to be totally inadequate to the purpose.
The
printing press, once set to going, could never be stopped.
We trust that some means, more effectual than any yet tried, may be devised to stop any further issues, and to bring in the greater part of the outstanding notes.
Otherwise we see, from the example of
France, what we may expect.
