Fiat Money Inflation in France | Page 3

integrity, humanity, and every principle of morality were thrown
into the welter of seething chaos and cruelty.
(4) The real estate upon which the paper currency was secured

represented confiscations by the State of the lands of the Church and 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