Mirabeau was a strenuous advocate of the Assignats. "They represent," he said, "real property, the most secure of all possessions, the soil on which we tread. There cannot be a greater error than the fear so generally prevalent as to the overissue of Assignats, reabsorbed progressively in the purchase of the national domain; this paper money can never become redundant."
In 1790 the interest was reduced to 3 per cent, and as the Treasury had again become exhausted, a further issue was decided upon; it was also decreed that the Assignats were to be accepted as legal tender, all public departments being instructed to receive them as the equivalent of metal money. The second issue amounted to 800,000,000 francs ($160,000,000) and carried no interest. It was solemnly declared in the decree authorizing the issue that the maximum issue was never to exceed one billion two hundred million francs (1,200,000,000) ($240,000,000). This pledge, however, was soon broken, and further issues brought the total up to three billion seven hundred and fifty million francs (3,750,000,000) ($750,000,000). The consequence of these further issues was instant depreciation, and the note of 100 francs ($20) sank to less than 20 francs ($4) in coin. Recourse was then had to protective legislation. The first step was to decree the penalty of six years' imprisonment against any person who should sell specie for a more considerable quantity of Assignats, or should stipulate a different price for commodities, according as payment was to be made in specie or Assignats. For the second offense, the penalty was to be twenty years' imprisonment (August 1, 1793). For this the death penalty was ultimately substituted (May 10, 1794). This severe provision was, however, repealed after the fall of Robespierre. Notwithstanding these precautions, the value of the Assignats still declined, till the proportion of specie had become that of sixty to one. Then came the passing, by the convention, on May 3, 1793, of the absurd maximum. The decree required all farmers and corn dealers to declare the quantity of corn in their possession and to sell it only in recognized markets. No person was to be allowed to lay in more than one month's supply, a maximum price was fixed above which no one was to buy or sell under severe penalties. These measures were soon stultified by further issues and by June, 1794, the total number of issued Assignats aggregated nearly eight billion francs ($1,600,000,000), of which only two billion four hundred and sixty-four million francs had returned to the Treasury to be destroyed. The extension of the maximum price to all commodities only increased the confusion. Trade was completely paralyzed and all manufacturing establishments were closed down. Attempts by the convention (legislature) to increase the value of the Assignats were of no avail. Too many causes operated in favor of the depreciation; the enormous issue, the uncertainty as to their value, if the revolution should fail; the relation they bore both to specie and commodities which retained their value and refused to be exchanged for money of constantly diminishing power. Even between the Assignats themselves there were differences. The Royal Assignats themselves, which had been issued under Louis XVI had depreciated less than the Republican ones. They were worth from 8 per cent to 15 per cent more, a fact due to the hope that in case of a counter-revolution they would be less likely to be discredited.
The Directory was guilty of even greater abuses in dealing with the Assignats.
By 1796 the issue had reached the enormous figure of forty-five billion francs ($9,000,000,000), and even this gigantic total was swollen still more by the numerous counterfeits introduced into France by the neighboring countries. The Assignats had now become totally valueless, the abolition of the maximum the previous year, 1795, had produced no effect; and, though by various payments into the Treasury, the total number had been reduced to about twenty-four billion francs ($4,800,000,000), their face value was about thirty to one of coin. At this value they were converted into eight hundred million francs ($160,000,000) of land warrants or Mandats Territoriaux, which were to constitute a mortgage on all the lands of the republic. These Mandats were no more successful than the Assignats; and even on the very day of their issues were at a discount of 82 per cent. They had an existence of six months, and were finally received back by the State at about the 70th part of their face value in coin. That is, the State gave one dollar in coin for seventy dollars in the paper.
This experience of France has been the experience of practically the entire world, Italy, Russia, Germany, Great Britain. The South American countries are now going through it. Even the very best of them, Brazil and Argentina, although their notes are not backed up by the land as those of France were, have suffered the same consequences of their folly. They are the notes issued by the Government against their own credit. They were issued as fiat money, but are gradually being retired just as the Assignats were as depreciated currency.
Mr. Banker: Well, we haven't anything on the South American countries to speak of ourselves from Colonial times down to the present day.
Uncle Sam: Now, Mr. Banker, just hold up; you can't get into that tale of woe tonight, for I always have a bad dream when I think of it; a veritable nightmare. We must quit for tonight. Mr. Farmer over there has gone to sleep on my hands already.
Mr. Farmer: No, he hasn't; not on your life, and I hope it's a very long life, Uncle Sam.
Mr. Laboringman: Mr. Farmer, you are the first man I ever saw who snores when he is awake. You snored loud enough to wake the dead. Your snoring actually kept me from going to sleep.
Uncle Sam: Well, boys, let me see whether I can recollect just what points we have made tonight.