Money and revolutions. Noted revolutions such as the American, Russian, French and Chinese all needed cash. badly. So they set about manufacturing some. The printing press, it can be stated, is deadlier than the guillotine…
There were plenty of men for whom hard money and the gold standard were matters not of economics but of morality. The monetary experience of the American continental congress, showed the United States came into existence on a full tide not of inflation, but of hyperinflation, the kind of inflation that ends only in worthless money. In terms of taxes, people were far from willing to accept this as an alternative. Taxes were disliked for their own sake and also identified with foreign oppression.
—But by 1797, memory of Law was fading, and the need for finance was strong. The Minister of Finance, Jacques Necker, was a prudent banker of the old school and argued strongly against the issuing of paper money, but his arguments were swept aside. At first, an ingenious compromise was proposed. One of the early acts of the National Assembly had been to confiscate all church land which amounted to somewhere between a quarter and third of all French property. It was proposed therefore that a form of bonds would be issued, called assignats: they would be interest- bearing, and the total issue would be small compared to the total value of the church lands, and in addition they would only be issued in large denominations of 200, 300 and 1000 livres – a term which conveniently translates into pounds or dollars: the minimum bank note would be one of £200 which, it was hoped, would be too large to be used as ordinary currency. There were political considerations too, for it was hoped to sell the church lands to the middle classes of France…click image for source…
In the past century and a half few things have more consistently troubled the conservative mind than the fear of paper money. No doubt this has been primarily a matter of pecuniary interest, the fear of the creditor that he would be paid off in money of inferior purchasing power. But in the minds of some conservatives there must also have been a lingering sense of the singular service that paper money had, in the recent past, rendered to revolution. Not only was the American revolution financed with it. So too, was the far more therapeutic eruption in France. If the French citizens had been required to act within the canons of conventional finnce, they could not, any more than he Americans, have acted at all.
If paper had saved revolutionaries before, might it not do so again- as in Russia after 1917 and in China after WWII? We have here an explanation of why the revolutionary role of paper money is so little celebrated. The American revolution would immediately, and the French revolution would eventually, acquire great respectability. It could not, either in decency or in safety, be conceded that anything so wonderful was accomplished by anything so questionable as the Continental notes of the American Revolution or the assignats of the French Revolution.
—His suspicions were at once aroused; and while the royal party were halting, he scanned carefully the side face of the gentleman inside, and thought he had seen him before somewhere. Was it in the Champ de Mars last July?
“Fetch me a new assignat,” said he to someone near. An assignat was a sort of bank-note, with the king’s head engraved on it. Drouet had no sooner compared the face on the assignat with the face under the round hat than he felt quite sure the gentleman was the king, attempting to escape.—Read More:
With regards to paper money, or digital money, there is always the question: Why is anything intrinsically so valueless so obviously desirable? What gives it the power to command goods, enlist service, induce cupidity, promote avarice, invite crime? People who make a profession of knowing about money tend to acquire a priestly reputation. Partly it is because such people are thpught to know why the valueless has value. If we go back to John Stuart Mill, it was the fact of scarcity, not the fact of intrinsic worthlessness, that was important. The problem of paper was that, in the absence of convertibility, there was nothing to restrict its supply.
The ingenuity of the French assignats lay in the commodity into which they could be exchanged and which by its scarcity gave them value. It was not gold and silver; these were not available in sufficient quantity, for as might be expected, they were possessed by those at whom the Revolution was directed. The supporting and restricting asset was land, the very thing that the Revolution was making available- which in large measure, the Revolution was all about. ( to be continued)…
ADDENDUM:
(see link at end)…But the need for money was pressing, and soon all ideas of a small issue in large denominations were swept aside, and in 1790 the first issue of the paper money ‘assignats’ was launched, amounting to some 400 million livres. The assignats were at first a great success. As is always the case with inflation, when the funny money is first issued, business boomed, the states debts were paid off, and everyone felt better off. But then something funny happened: prices began to rise and yet more money was needed to fuel the growing business boom. In September of the same year, a second issue of assignats was made, twice as big as the first, for 800 million livres. Inflation then took off with a vengeance and more money was needed. In June 1791 there was a third issue, in December a fourth, and in April 1792 there was a fifth issue. Inflation now really roared ahead: the prudent middle classes were soon destroyed, their savings halved – soon to become worthless, and it was the opportunists who rose to power and influence. What is worse, a certain madness ensues: money is one of the great anchors of our life, a the measure by which so many valuations are founded, and if that measure sudde
goes awry, a psychological uncertainty enters our soul, and we begin to go a little mad.By midsummer there were riots in Paris. The king was dethroned, the royal family imprisoned, and a revolutionary commune took power. The monarchy was abolished and government was carried out by ad hoc committees led by whoever could gain the support of the mob. In January 1793, Louis XVI was beheaded and yet more assignats were issued – the numbers by this time were becoming meaningless…Read More:http://www.civilisation.org.uk/Later/french_revolution.htm
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