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.
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 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.