French Assembly reported that "the people demand a new circulating medium;" that "the circulation of paper is the best of operations;" that "it is the most free, because it reposes on the will of the people;" that "it will bind the interests of the citizen to the public good."
The Government had appropriated the vast property of the French Church, amounting in value to about four thousand million francs, and this was to be the security of the paper. Accordingly, in April, 1790, the "Government issued four hundred million francs in assignats—paper-money secured by a pledge of productive real estate, and bearing interest to the holder at three per cent." What could be more secure? It was maintained that such a currency would immediately prove itself better than coin.
"The first result of this issue was apparently all that the most sanguine could desire; the Treasury was at once greatly relieved; a portion of the public debt was paid; creditors were encouraged; credit revived; ordinary expenses were met, and the paper-money having thus been passed from the Government into the midst of the people, trade was revived, and all difficulties seemed past."
Possibly, if the Government could have stopped with these temporary advantages, no great harm would have been done. But the difficulty about money is, that there is never thought to be enough of it. The benefit of real money (coin) is to set a stubborn limit to this universal want—it cannot be got without earning-it or giving equivalent property for it. The curse of pseudo-money (irredeemable paper) is, that it panders to the universal greed because any amount of it can be manufactured and set afloat at any time. And so, of course, the French, after the first taste, wanted more. The further issue was stoutly resisted by the ablest men, but the current set so strong, and the demagogues were so plausible, that the measure was carried, and in September the Government issued eight hundred million assignats, "solemnly declaring that in no case should the entire amount put in circulation exceed twelve hundred millions."
Great were the rejoicings on every side. Gold was to lose all value, as it was a superfluity, and the nation was committed to the policy of inflation. But the old cry of the "lack of a circulating medium" soon broke forth again. A hundred millions were issued under the plea of a want of small notes. On June 19, 1791, less than nine months after the former great issue, six hundred millions more were put in circulation. Next came depreciation of the currency, a loss of its purchasing power, and a rise in prices. Some said that this was due to ignorance in the rural districts, and the remedy proposed was "education of the people." M. Prudhomme's newspaper, however, declared that "coin will keep rising until the people have hung a broker." People naturally began to be alarmed, and to convert the paper into coin and hoard it up. This was regarded as criminal, and Marat asserted that death was the proper penalty for persons who thus hid their money.
But, after the first stimulus of these issues, business soon became depressed, trade stagnated, the manufactories were closed, and thousands of workmen were discharged. Uncertainty and fluctuation of values followed, speculation set in, and, in the language of Louis Blanc, "commerce was dead; betting took its place." "In the cities now arose a luxury and license which is a greater evil than the plundering which ministers to it. In the country the gambling spirit spread more and more; nor was this reckless and corrupt spirit confined to business-men; it began to break out in official circles; and public men who, a few years before, had been
