Delaware gazette and state journal. (Wilmington, Del.) 1883-1902, 1896-10-08
TRIED FIAT FINANCIERING.
Baltimore Sun.

ratio Ul 10 10 i IN SIMPLY PROJECT lDr
crenting money that is not redeemable
anywhere, or by anybody, Mt its face
value, aud compelling it to pass current
among the people by the mere legislative
decree of the government. This idea has
been tried many times by different ma
tions in the past and has always failed.
One of the most famous experiments
of this kind was made by France little
more than hundred years ago. The close
of the year 1880 found the French reyolu-
tionary government in financial straits.
The cry was raised in the National AS
sembly for an issue Of paper money.
Necker. an able and conscientious states
man. who was minister of finance NJ the
time, opposed the project, and predicted
disaster if il was carried through. But
the demagogues prevailed, aud the story
of what followed is Interestingly told
by Prof, Andrew ID. White, formerly
president of Cornell University. in little
book of eighty-six pages which has just
been published. The finance committee
of the French Assembly set the ball of
6atisns rolling by II report in favor of
lurgc issue of paper money. Some of the
language in this report has cuTiously
strong resemblance to that which is now
employed by free-silver orators in this
country. II appealed to the patriotism
of the French people in these words: Let
us show to Europe that we understand
our own resources: let us Immediately
take the broad road to our liberation, in
stead of dragging ourselves along the
tortuous and obscure paths of fragmen-
tary loans" II closed by Recommending
an issue of paper money, carefully guard
cd to the amount of four hundred mil
lion francs.
In April, 1870, this amount was issued
in the form of the celebrated assignats.
They were not based on anything less
valuable than the free silver party pro-
poses now to base an unlimited issue of
dollars. The landed estates which had
been confiscatetl from the church and the
nobility were pledged as security for the
assignats. These estates comprised about
two-thirds Of the entire territory of
France. No irrcdccmable currency has
ever claimed better guarantee for its
soundness and safety as n circulating med
ium. 1t was secured by n mortgage on
productive real estate of vastly greater
value than the issue. The notes bore in
terest at 3 per cent, so that there was
every reason for their being withdrawn
from circulation whenever they became
redundant, and it was publicly proclaimed
that they would be SO withdrawn. The
first issue of assignats was based, it is
true, upon the confiscated estates of the
church only, but these amounted in value
to four billion francs, yielding a yearly
income of about two hundred million
francs. What could be better security,
if any security at all could have been
good except Il specie reserve pledged to
its redemption on demand. for the issue
of fiat money to the amount of four hum
dred million francs
1t was not long after the first edition
of assignats was printed before another
issue was called for. Mirabeau, who had
opposed the first issue, came forward to
eloquently advocate the second. He in
sisted that there was no danger that pa
per money would become too abundant.
because it would be absorbed in rapid
purchases of the national lands. Toward
the close of his speech. In u burst of fer
vid oratory, he proposed that assignats
should be issued in sufficient quantity
to cover the entire national debt of 2,400,-
000,000 francs, predicting that perma-
nent prosperity would he thus insured to
the nation. Meanwhile. the first issue of
assignats had not been kept at par and
were steadily deprcciating. The conser-
vative Necker opposed the second issue
as he had the first, bur in vain, and. re-
signing his post MS minister of finance, he
left France forever. Then the imitation
lists had it all their own way except for
few notable protests. Talleyrand, for
one, made memorable speech, in which
he said, referring TO the laws which made
the acceptance Of paper money cOmpul-
sorry upon all citizens: You can, indeed,
arrange it so that the people shall be forced
to take thousand francs in paper for
a thousand francs in specie; but you can
never arrange ii so that man shall be
obliged to give Il thousand francs in specie
for thousand francs in paper. In that
fact is imbedded the entire question, and
on account of that fact the whole system
fails"
Exactly in the same way the whole sys-
TEN of currency projected by our own
free-silver party would fail. Congress
can, indeed ohlige all the American peo.
pie to take a thousand dollars in silver
coined at 16 to l for a thousand dollars
due for debt or for goods purchased, hut
Congress can never arrange IL so that an
American citizen shall he obliged to give
thousand dollars in gold. worth 100
cents apiece, for Il thousand dollars in
silver worth only SO cents apiece, and on
account of that fact the whole scheme
would fail, because we should simply
drive all our gold out of the country or
into hiding places within the country, and
the silver dollars left to us could no more
be made to circulate at par with gold than
the French assignats We're made to do
so hundred years ago. They would de-
preciate in the hands of the people, just
as the assignats did and the rise in prices
would be the index of their depreciation.
The more they fell relatively to gold The
higher prices would rise. and the more of
these dchased dollars it would take TO buy
q given amount of goods in the market.
To briefly finish the story of the assig-
mats. one issue of them followed another
until, on December A. 1902. it was Off
cinlly stated that 3.400. o000D0 francs had
been put forth, of which 60O.000,000 had
BEEN burned. leaving in circulation 2,S00,-
100000 francs. Then followed the con-
tiscation of the landed estates of she aris-
tocracy. valued in 1913 at 300G000,000
francs. and upon these more issues of
paper money were based. BY the end of
1904 seven thousand million francs in
assgnats were in circulation. and at the
end of July, 1795, 14,000,O00 francs
in paper money were afoat in France.
There was no lack of per capita circula-
tion and no scarcity of currency. 1t had
behind it. too, just about as much value
intrinsicllly (about 80 per cent of the
fono yoI,,nl nc Nh prvn,, ,rnrnras, 20 INT