Fiat Money Inflation in France | Page 2

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,