Fiat Money Inflation in France | Page 7

five months after the issue of the four hundred millions in
_assignats_, the government had spent them and was again in
distress.[12]
The old remedy immediately and naturally recurred to the minds of
men. Throughout the country began a cry for another issue of paper;
thoughtful men then began to recall what their fathers had told them

about the seductive path of paper-money issues in John Law's time, and
to remember the prophecies that they themselves had heard in the
debate on the first issue of assignats less than six months before.
At that time the opponents of paper had prophesied that, once on the
downward path of inflation, the nation could not be restrained and that
more issues would follow. The supporters of the first issue had asserted
that this was a calumny; that the people were now in control and that
they could and would check these issues whenever they desired.
The condition of opinion in the Assembly was, therefore, chaotic: a few
schemers and dreamers were loud and outspoken for paper money;
many of the more shallow and easy-going were inclined to yield; the
more thoughtful endeavored to breast the current.
One man there was who could have withstood the pressure: Mirabeau.
He was the popular idol,--the great orator of the Assembly and much
more than a great orator,--he had carried the nation through some of its
worst dangers by a boldness almost godlike; in the various conflicts he
had shown not only oratorical boldness, but amazing foresight. As to
his real opinion on an irredeemable currency there can be no doubt. It
was the opinion which all true statesmen have held, before his time and
since,--in his own country, in England, in America, in every modern
civilized nation. In his letter to Cerutti, written in January, 1789, hardly
six months before, he had spoken of paper money as "A nursery of
tyranny, corruption and delusion; a veritable debauch of authority in
delirium." In one of his early speeches in the National Assembly he had
called such money, when Anson covertly suggested its issue, "a loan to
an armed robber," and said of it: "that infamous word, paper money,
ought to be banished from our language." In his private letters written
at this very time, which were revealed at a later period, he showed that
he was fully aware of the dangers of inflation. But he yielded to the
pressure: partly because he thought it important to sell the government
lands rapidly to the people, and so develop speedily a large class of
small landholders pledged to stand by the government which gave them
their titles; partly, doubtless, from a love of immediate rather than of
remote applause; and, generally, in a vague hope that the severe,
inexorable laws of finance which had brought heavy punishments upon
governments emitting an irredeemable currency in other lands, at other
times, might in some way at this time, be warded off from France.[13]

The question was brought up by Montesquieu's report on the 27th of
August, 1790. This report favored, with evident reluctance, an
additional issue of paper. It went on to declare that the original issue of
four hundred millions, though opposed at the beginning, had proved
successful; that assignats were economical, though they had dangers;
and, as a climax, came the declaration: "We must save the
country."[14]
Upon this report Mirabeau then made one of his most powerful
speeches. He confessed that he had at first feared the issue of
_assignats_, but that he now dared urge it; that experience had shown
the issue of paper money most serviceable; that the report proved the
first issue of assignats a success; that public affairs had come out of
distress; that ruin had been averted and credit established. He then
argued that there was a difference between paper money of the recent
issue and that from which the nation had suffered so much in John
Law's time; he declared that the French nation had now become
enlightened and he added, "Deceptive subtleties can no longer mislead
patriots and men of sense in this matter." He then went on to say: "We
must accomplish that which we have begun," and declared that there
must be one more large issue of paper, guaranteed by the national lands
and by the good faith of the French nation. To show how practical the
system was he insisted that just as soon as paper money should become
too abundant it would be absorbed in rapid purchases of national lands;
and he made a very striking comparison between this self- adjusting,
self-converting system and the rains descending in showers upon the
earth, then in swelling rivers discharged into the sea, then drawn up in
vapor and finally scattered over the earth again in rapidly fertilizing
showers. He predicted