Fiat Money Inflation in France | Page 3

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