Part 6

Interesting is it to note in the midst of all this the steady action of another simple law in finance. Prisons, guillotines, enactments inflicting twenty years' imprisonment in chains upon persons twice convicted of buying or selling paper money at less than its nominal value, and death upon investors in foreign securities, were powerless. The National Convention, fighting a world in arms and with an armed revolt on its own soil, showed titanic power, but in its struggle to circumvent one simple law of nature its weakness was pitiable. The louis d'or stood in the market as a monitor, noting each day, with unerring fidelity, the decline in value of the assignat; a monitor not to be bribed, not to be scared. As well might the National Convention try to bribe or scare away the polarity of the mariner's compass. On August 1, 1795, this gold louis of 25 francs was worth in paper, 920 francs; on September 1st, 1,200 francs; on November 1st, 2,600 francs; on December 1st, 3,050 francs. In February, 1796, it was worth 7,200 francs or one franc in gold was worth 288 francs in paper. Prices of all commodities went up nearly in proportion. The writings of this period give curious details. Thibaudeau, in his Memoirs, speaks of sugar as 500 francs a pound, soap, 230 francs, candles, 140 francs. Mercier, in his lifelike pictures of the French metropolis at that period, mentions 600 francs as carriage hire for a single drive, and 6,000 for an entire day. Examples from other sources are such as the following:--a measure of flour advanced from two francs in 1790, to 225 francs in 1795; a pair of shoes, from five francs to 200; a hat, from 14 francs to 500; butter, to, 560 francs a pound; a turkey, to 900 francs. Everything was enormously inflated in price except the wages of labor. As manufacturers had closed, wages had fallen, until all that kept them up seemed to be the fact that so many laborers were drafted off into the army. From this state of things came grievous wrong and gross fraud. Men who had foreseen these results and had gone into debt were of course jubilant. He who in 1790 had borrowed 10,000 francs could pay his debts in 1796 for about 35 francs. Laws were made to meet these abuses. As far back as 1794 a plan was devised for publishing official "tables of depreciation" to be used in making equitable settlements of debts, but all such machinery proved futile. On the 18th of May, 1796, a young man complained to the National Convention that his elder brother, who had been acting as administrator of his deceased father's estate, had paid the heirs in assignats, and that he had received scarcely one three-hundredth part of the real value of his share. To meet cases like this, a law was passed establishing a "scale of proportion." Taking as a standard the value of the assignat when there were two billions in circulation, this law declared that, in payment of debts, one-quarter should be added to the amount originally borrowed for every five hundred millions added to the circulation. In obedience to this law a man who borrowed two thousand francs when there were two billions in circulation would have to pay his creditors twenty-five hundred francs when half a billion more were added to the currency, and over thirty-five thousand francs before the emissions of paper reached their final amount. This brought new evils, worse, if possible, than the old.

The question will naturally be asked, On whom did this vast depreciation mainly fall at last? When this currency had sunk to about one three-hundredth part of its nominal value and, after that, to nothing, in whose hands was the bulk of it? The answer is simple. I shall give it in the exact words of that thoughtful historian from whom I have already quoted: "Before the end of the year 1795 the paper money was almost exclusively in the hands of the working classes, employees and men of small means, whose property was not large enough to invest in stores of goods or national lands. Financiers and men of large means were shrewd enough to put as much of their property as possible into objects of permanent value. The working classes had no such foresight or skill or means. On them finally came the great crushing weight of the loss. After the first collapse came up the cries of the starving. Roads and bridges were neglected; many manufactures were given up in utter helplessness." To continue, in the words of the historian already cited: "None felt any confidence in the future in any respect; few dared to make a business investment for any length of time and it was accounted a folly to curtail the pleasures of the moment, to accumulate or save for so uncertain a future."

This system in finance was accompanied by a system in politics no less startling, and each system tended to aggravate the other. The wild radicals, having sent to the guillotine first all the Royalists and next all the leading Republicans they could entrap, the various factions began sending each other to the same destination:--Hébertists, Dantonists, with various other factions and groups, and, finally, the Robespierrists, followed each other in rapid succession. After these declaimers and phrase-mongers had thus disappeared there came to power, in October, 1795, a new government,--mainly a survival of the more scoundrelly,--the Directory. It found the country utterly impoverished and its only resource at first was to print more paper and to issue even while wet from the press. These new issues were made at last by the two great committees, with or without warrant of law, and in greater sums than ever. Complaints were made that the array of engravers and printers at the mint could not meet the demand for assignats--that they could produce only from sixty to seventy millions per day and that the government was spending daily from eighty to ninety millions. Four thousand millions of francs were issued during one month, a little later three thousand millions, a little later four thousand millions, until there had been put forth over thirty-five thousand millions. The purchasing power of this paper having now become almost nothing, it was decreed, on the 22nd of December, 1795, that the whole amount issued should be limited to forty thousand millions, including all that had previously been put forth and that when this had been done the copper plates should be broken. Even in spite of this, additional issues were made amounting to about ten thousand millions. But on the 18th of February, 1796, at nine o'clock in the morning, in the presence of a great crowd, the machinery, plates and paper for printing assignats were brought to the Place Vendome and there, on the spot where the Napoleon Column now stands, these were solemnly broken and burned.

Shortly afterward a report by Camus was made to the Assembly that the entire amount of paper money issued in less than six years by the Revolutionary Government of France had been over forty-five thousand millions of francs--that over six thousand millions had been annulled and burned and that at the final catastrophe there were in circulation close upon forty thousand millions. It will be readily seen that it was fully time to put an end to the system, for the gold "louis" of twenty-five francs in specie had, in February, 1796, as we have seen, become worth 7,200 francs, and, at the latest quotation of all, no less than 15,000 francs in paper money--that is, one franc in gold was nominally worth 600 francs in paper.

Such were the results of allowing dreamers, schemers, phrase-mongers, declaimers and strong men subservient to these to control a government.

III.

The first new expedient of the Directory was to secure a forced loan of six hundred million francs from the wealthier classes; but this was found fruitless. Ominous it was when persons compelled to take this loan found for an assignat of one hundred francs only one franc was allowed. Next a National Bank was proposed; but capitalists were loath to embark in banking while the howls of the mob against all who had anything especially to do with money resounded in every city. At last the Directory bethought themselves of another expedient. This was by no means new. It had been fully tried on our continent twice before that time: and once, since--first, in our colonial period; next, during our Confederation; lastly, by the "Southern Confederacy" and here, as elsewhere, always in vain. But experience yielded to theory--plain business sense to financial metaphysics. It was determined to issue a new paper which should be "fully secured" and "as good as gold."

Pursuant to this decision it was decreed that a new paper money "fully secured and as good as gold" be issued under the name of "mandats." In order that these new notes should be "fully secured," choice public real estate was set apart to an amount fully equal to the nominal value of the issue, and any one offering any amount of the mandats could at once take possession of government lands; the price of the lands to be determined by two experts, one named by the government and one by the buyer, and without the formalities and delays previously established in regard to the purchase of lands with assignats.

Perhaps the most whimsical thing in the whole situation was the fact that the government, pressed as it was by demands of all sorts, continued to issue the old assignats at the same time that it was discrediting them by issuing the new mandats. And yet in order to make the mandats "as good as gold" it was planned by forced loans and other means to reduce the quantity of assignats in circulation, so that the value of each assignat should be raised to one-thirtieth of the value of gold, then to make mandats legal tender and to substitute them for assignats at the rate of one for thirty. Never were great expectations more cruelly disappointed. Even before the mandats could be issued from the press they fell to thirty-five per cent of their nominal value; from this they speedily fell to fifteen, and soon after to five per cent, and finally, in August, 1796, six months from their first issue, to three per cent. This plan failed--just as it failed in New England in 1737; just as it failed under our own Confederation in 1781; just as it failed under the Southern Confederacy during our Civil War.

To sustain this new currency the government resorted to every method that ingenuity could devise. Pamphlets suited to people of every capacity were published explaining its advantages. Never was there more skillful puffing. A pamphlet signed "Marchant" and dedicated to "People of Good Faith" was widely circulated, in which Marchant took pains to show the great advantage of the mandats as compared with assignats,--how land could be more easily acquired with them; how their security was better than with assignats; how they could not, by any possibility, sink in values as the assignats had done. But even before the pamphlet was dry from the press the depreciation of the mandats had refuted his entire argument.

The old plan of penal measures was again pressed. Monot led off by proposing penalties against those who shall speak publicly against the mandats; Talot thought the penalties ought to be made especially severe; and finally it was enacted that any persons "who by their discourse or writing shall decry the mandats shall be condemned to a fine of not less than one thousand francs or more than ten thousand; and in case of a repetition of the offence, to four years in irons." It was also decreed that those who refused to receive the mandats should be fined,--the first time, the exact sum which they refuse; the second time, ten times as much; and the third time, punished with two years in prison. But here, too, came in the action of those natural laws which are alike inexorable in all countries. This attempt proved futile in France just as it had proved futile less than twenty years before in America. No enactments could stop the downward tendency of this new paper "fully secured," "as good as gold"; the laws that finally govern finance are not made in conventions or congresses.

From time to time various new financial juggles were tried, some of them ingenious, most of them drastic. It was decreed that all assignats above the value of one hundred francs should cease to circulate after the beginning of June, 1796. But this only served to destroy the last vestige of, confidence in government notes of any kind. Another expedient was seen in the decree that paper money should be made to accord with a natural and immutable standard of value and that one franc in paper should thenceforth be worth ten pounds of wheat. This also failed. On July 16th another decree seemed to show that the authorities despaired of regulating the existing currency and it was decreed that all paper, whether mandats or assignats, should be taken at its real value, and that bargains might be made in whatever currency people chose. The real value of the mandats speedily sank to about two per cent of their nominal value and the only effect of this legislation seemed to be that both assignats and mandats went still lower. Then from February 4 to February 14, 1797, came decrees and orders that the engraving apparatus for the mandats should be destroyed as that for the assignats had been, that neither assignats nor mandats should longer be a legal tender and that old debts to the state might be paid for a time with government paper at the rate of one per cent of their face value. Then, less than three months later, it was decreed that the twenty-one billions of assignats still in circulation should be annulled. Finally, on September 30, 1797, as the culmination of these and various other experiments and expedients, came an order of the Directory that the national debts should be paid two-thirds in bonds which might be used in purchasing confiscated real estate, and the remaining "Consolidated Third," as it was called, was to be placed on the "Great Book" of the national debt to be paid thenceforth as the government should think best.

As to the bonds which the creditors of the nation were thus forced to take, they sank rapidly, as the assignats and mandats had done, even to three per cent of their value. As to the "Consolidated Third," that was largely paid, until the coming of Bonaparte, in paper money which sank gradually to about six per cent of its face value. Since May, 1797, both assignats and mandats had been virtually worth nothing.

So ended the reign of paper money in France. The twenty-five hundred millions of mandats went into the common heap of refuse with the previous forty-five thousand millions of assignats: the nation in general, rich and poor alike, was plunged into financial ruin from one end to the other.

On the prices charged for articles of ordinary use light is thrown by extracts from a table published in 1795, reduced to American coinage.

1790 1795 For a bushel of flour 40 cents 45 dollars For a bushel of oats 18 cents 10 dollars For a cartload of wood 4 dollars 500 dollars For a bushel of coal 7 cents 2 dollars For a pound of sugar 18 cents 12 1/2 dollars For a pound of soap 18 cents 8 dollars For a pound of candles 18 cents 8 dollars For one cabbage 8 cents 5 1/2 dollars For a pair of shoes 1 dollar 40 dollars For twenty-five eggs 24 cents 5 dollars

But these prices about the middle of 1795 were moderate compared with those which were reached before the close of that year and during the year following. Perfectly authentic examples were such as the following:

A pound of bread 9 dollars A bushel of potatoes 40 dollars A pound of candles 40 dollars A cartload of wood 250 dollars

So much for the poorer people. Typical of those esteemed wealthy may be mentioned a manufacturer of hardware who, having retired from business in 1790 with 321,000 livres, found his property in 1796 worth 14,000 francs.

For this general distress arising from the development and collapse of "fiat" money in France, there was, indeed, one exception. In Paris and a few of the other great cities, men like Tallien, of the heartless, debauched, luxurious, speculator, contractor and stock-gambler class, had risen above the ruins of the multitudes of smaller fortunes. Tallien, one of the worst demagogue "reformers," and a certain number of men like him, had been skillful enough to become millionaires, while their dupes, who had clamored for issues of paper money, had become paupers.

The luxury and extravagance of the currency gamblers and their families form one of the most significant features in any picture of the social condition of that period.

A few years before this the leading women in French society showed a nobility of character and a simplicity in dress worthy of Roman matrons. Of these were Madame Boland and Madame Desmoulins; but now all was changed. At the head of society stood Madame Tallien and others like her, wild in extravagance, daily seeking new refinements in luxury, and demanding of their husbands and lovers vast sums to array them and to feed their whims. If such sums could not be obtained honestly they must be had dishonestly. The more closely one examines that period, the more clearly he sees that the pictures, given by Thibaudeau and Challamel and De Goncourt are not at all exaggerated.

The contrast between these gay creatures of the Directory period and the people at large was striking. Indeed much as the vast majority of the wealthy classes suffered from impoverishment, the laboring classes, salaried employees of all sorts, and people of fixed income and of small means, especially in the cities, underwent yet greater distress. These were found, as a rule, to subsist mainly on daily government rations of bread at the rate of one pound per person. This was frequently unfit for food and was distributed to long lines of people, men, women and children, who were at times obliged to wait their turn even from dawn to dusk. The very rich could, by various means, especially by bribery, obtain better bread, but only at enormous cost. In May, 1796, the market price of good bread was, in paper, 80 francs (16 dollars) per pound and a little later provisions could not be bought for paper money at any price.

And here it may be worth mentioning that there was another financial trouble especially vexatious. While, as we have seen, such enormous sums, rising from twenty to forty thousand millions of francs in paper, were put in circulation by the successive governments of the Revolution, enormous sums had been set afloat in counterfeits by criminals and by the enemies of France. These came not only from various parts of the French Republic but from nearly all the surrounding nations, the main source being London. Thence it was that Count Joseph de Puisaye sent off cargoes of false paper, excellently engraved and printed, through ports in Brittany and other disaffected parts of France. One seizure by General Hoche was declared by him to exceed in nominal value ten thousand millions of francs. With the exception of a few of these issues, detection was exceedingly difficult, even for experts; for the vast majority of the people it was impossible.

Nor was this all. At various times the insurgent royalists in La Vendee and elsewhere put their presses also in operation, issuing notes bearing the Bourbon arms,--the fleur-de-lis, the portrait of the Dauphin (as Louis XVII) with the magic legend "De Par le Roi," and large bodies of the population in the insurgent districts were forced to take these. Even as late as 1799 these notes continued to appear.

The financial agony was prolonged somewhat by attempts to secure funds by still another "forced loan," and other discredited measures, but when all was over with paper money, specie began to reappear--first in sufficient sums to do the small amount of business which remained after the collapse. Then as the business demand increased, the amount of specie flowed in from the world at large to meet it and the nation gradually recovered from that long paper-money debauch.

Thibaudeau, a very thoughtful observer, tells us in his Memoirs that great fears were felt as to a want of circulating medium between the time when paper should go out and coin should come in; but that no such want was severely felt--that coin came in gradually as it was wanted.

Nothing could better exemplify the saying of one of the most shrewd of modern statesmen that "There will always be money."