in land of between 2 billion and 2.4 billion francs, though this estimate, like our estimates today, rested on the assumption that their formal money (the franc) had some constant value. In spite of the promises made, which are just such promises as we depend upon in the relation of gold reserves to our currency, the French Government betrayed its citizens and, in June, 1791, authorized a third issue of 600 million francs, making a total issue up to this date of 1.8 billion francs, or 50% more than the guaranteed maximum. And yet three years after the initial issue, with this amount of 1.8 billion francs put into circulation, the depreciation in their value was no more than 8%, according to Gide, the French economist [1]
An 8% depreciation arising from a 50% dilution of good faith may seem to be sufficient warning against taking land as a basis of value, but how are we to explain a 48.8% depreciation of value in the dollar in an equal interval between the years 1915 and 1918 in the United States, where our paper and credit are supposed to stand securely on a gold basis?[2] In the end, when the French Government had broken all pledges and had issued mortgages or assignats amounting to 45 billion francs against the underlying land-value of 2 billion francs, or 43.8 billion francs in excess of its pledges, chaos naturally ensued. We are now asked to realize the awful havoc caused by using land as a basis of value. As Gide points out, immediately following the comment quoted above, in reviewing the whole episode, “The quantity issued was, however, far in excess of the value of the property," and, “Even if this issue had been of good gold or silver it would have caused a considerable depreciation of the metallic money, since it would have been twenty times greater than what was required.”
To condemn measurable land, our only constant, except the sun, as one of the essential bases of value, because of this instance of political bad faith, in reality is an argument against popular government, not against the economic experiment itself. It is very much as though gold should be condemned
