Fiat Money Inflation in France | Page 8

that the members would be surprised at the
astonishing success of this paper money and that there would be none
too much of it.
His theory grew by what it fed upon,--as the paper-money theory has
generally done. Toward the close, in a burst of eloquence, he suggested
that assignats be created to an amount sufficient to cover the national
debt, and that all the national lands be exposed for sale immediately,
predicting that thus prosperity would return to the nation and that an
classes would find this additional issue of paper money a blessing.[15]
This speech was frequently interrupted by applause; a unanimous vote

ordered it printed, and copies were spread throughout France. The
impulse given by it permeated all subsequent discussion; Gouy arose
and proposed to liquidate the national debt of twenty-four hundred
millions,--to use his own words--"by one single operation, grand,
simple, magnificent."[16] This "operation" was to be the emission of
twenty-four hundred millions in legal tender notes, and a law that
specie should not be accepted in purchasing national lands. His
demagogy bloomed forth magnificently. He advocated an appeal to the
people, who, to use his flattering expression, "ought alone to give the
law in a matter so interesting." The newspapers of the period, in
reporting his speech, noted it with the very significant remark, "This
discourse was loudly applauded."
To him replied Brillat-Savarin. He called attention to the depreciation
of assignats already felt. He tried to make the Assembly see that
natural laws work as inexorably in France as elsewhere; he predicted
that if this new issue were made there would come a depreciation of
thirty per cent. Singular, that the man who so fearlessly stood against
this tide of unreason has left to the world simply a reputation as the
most brilliant cook that ever existed! He was followed by the Abbe
Goutes, who declared,--what seems grotesque to those who have read
the history of an irredeemable paper currency in any country--that new
issues of paper money "will supply a circulating medium which will
protect public morals from corruption."[17]
Into this debate was brought a report by Necker. He was not, indeed,
the great statesman whom France especially needed at this time, of all
times. He did not recognize the fact that the nation was entering a great
revolution, but he could and did see that, come what might, there were
simple principles of finance which must be adhered to. Most earnestly,
therefore, he endeavored to dissuade the Assembly from the proposed
issue; suggesting that other means could be found for accomplishing
the result, and he predicted terrible evils. But the current was running
too fast. The only result was that Necker was spurned as a man of the
past; he sent in his resignation and left France forever.[18] The
paper-money demagogues shouted for joy at his departure; their chorus
rang through the journalism of the time. No words could express their
contempt for a man who was unable to see the advantages of filling the
treasury with the issues of a printing press. Marat, Hébert, Camille

Desmoulins and the whole mass of demagogues so soon to follow them
to the guillotine were especially jubilant.[19]
Continuing the debate, Rewbell attacked Necker, saying that the
assignats were not at par because there were not yet enough of them; he
insisted that payments for public lands be received in assignats alone;
and suggested that the church bells of the kingdom be melted down into
small money. Le Brun attacked the whole scheme in the Assembly, as
he had done in the Committee, declaring that the proposal, instead of
relieving the nation, would wreck it. The papers of the time very
significantly say that at this there arose many murmurs. Chabroud came
to the rescue. He said that the issue of assignats would relieve the
distress of the people and he presented very neatly the new theory of
paper money and its basis in the following words: "The earth is the
source of value; you cannot distribute the earth in a circulating value,
but this paper becomes representative of that value and it is evident that
the creditors of the nation will not be injured by taking it." On the other
hand, appeared in the leading paper, the "Moniteur," a very thoughtful
article against paper money, which sums up all by saying, "It is, then,
evident that all paper which cannot, at the will of the bearer, be
converted into specie cannot discharge the functions of money." This
article goes on to cite Mirabeau's former opinion in his letter to Cerutti,
published in 1789,--the famous opinion of paper money as "a nursery
of tyranny, corruption and delusion; a veritable debauch of authority in
delirium." Lablache, in the Assembly, quoted a saying that "paper
money is the emetic of great