debates of the National Assembly upon the proposition showed that John Law's experiment had not been entirely forgotten. There was strong opposition, but it was overcome by the usual arguments in favor of cheap money. "Paper money," said one of the advocates of the assignats, "under a despotism is dangerous; it favors corruption: but in a nation constitutionally governed, which takes care of its own notes, which determines their number and use, that danger no longer exists."

These curious arguments carried the day in the National Assembly, and a first issue of assignats, to the value of 400,000,000 francs, was issued in December, 1789. They bore interest, and were made payable at sight, but no interest was ever paid, and subsequent issues had no interest provision. The first issue represented about one-fifth of the total value of the confiscated lands.

Yet with this solid basis of value upon which to rest, the assignats never circulated at par. A few months after the first issue demands . began to be made for a second issue, as is invariably the case in all experiments of this kind. Talleyrand opposed the second issue in a speech of great ability, many of whose passages have passed into economic literature as model statements of fundamental monetary principles. "The assignat," he said, "considered as a title of credit, has a positive and material value; this value of the assignat is precisely the same as that of the land which it represents, but still it must be admitted, above all, that never will any national paper be upon a par with the metals; never will the supplementary sign of the first representative sign of wealth have the exact value of its model; the very title proves want, and want spreads alarm and distrust around it." And again: "You can arrange it so that people shall be forced to take a thousand francs in paper for a thousand francs in specie, but you never can arrange it so that the people shall be obliged to give a thousand francs in specie for a thousand francs in paper." Still again: "Assignat money, however safe, however solid it may be, is an abstraction of paper money; it is consequently but the free or forced sign, not of wealth, but merely of credit." In answer to the arguments of Talleyrand, the most effective, because most "taking," argument, if argument it can be called, was the following by Mirabeau: "It is in vain to compare assignats, secured on the solid basis of these domains, to an ordinary paper currency possessing a forced circulation. They represent real property, the most secure of all possessions, the land on which we tread."

This resounding phrase of Mirabeau carried the day in the National Assembly, and in September, 1790, a second issue of assignats, to the value of 800,000,000 francs, bearing no interest, was ordered.

The decree for this second issue contained a pledge that in no case should the amount of assignats exceed twelve hundred millions. But the nation was drunk with its own stimulant, and pledges were of no value. In June, 1791, a third issue of 600,000,000 was ordered. This was followed soon afterward by a fourth issue of 300,000,000, and by a new pledge that the total amount should never be allowed to exceed sixteen hundred millions. But this pledge, like two others that had been made before it, was broken as soon as a demand for more issues became irresistible. Fresh issues followed one another in rapid succession in 1792, and at the close of that year an official statement was put forth that a total of thirty-four hundred millions had been issued, of which six hundred millions had been destroyed, leaving twenty-eight hundred millions in circulation.

Specie had disappeared from circulation soon after the second issue, and the value of the assignats began to go steadily and rapidly downward. Business and industry soon felt the effects, and the inevitable collapse followed. Ex-President Andrew D. White, whose tract, Paper Money Inflation in France, is the most admirable and complete statement of this experience which has been published, says of the situation at this stage: "What the bigotry of Louis XIV, and the shiftlessness of Louis XV, could not do in nearly a century, was accomplished by this tampering with the currency in a few months. Everything that tariffs and custom-houses could do was done. Still the great manufactories of Normandy were closed; those of the rest of the kingdom speedily followed, and vast numbers of workmen, in all parts of the country, were thrown out of employment.

"In the spring of 1791 no one knew whether a piece of paper money, representing 100 francs, would, a month later, have a purchasing power of 100 francs, or 90 francs, or 80, or 60. The result was that capitalists declined to embark their means in business. Enterprise received a mortal blow. Demand for labor was still further diminished. The business of France dwindled into a mere living from hand to mouth. This state of things, too, while it bore heavily against the interests of the moneyed classes, was still more ruinous to those in more moderate, and most of all to those in straitened, circumstances. With the masses of the people the purchase of every article of supply became a speculation—a speculation in which the professional specu

lator had an immense advantage over the buyer. Says the most brilliant apologist for French Revolutionary statesmanship, 'Commerce was dead; betting took its place.""

In the early part of 1792 the assignat was 30 per cent below par. In the following year it had fallen to 67 per cent below par. A basis for further issues was secured by the confiscation of lands of emigrant nobles, and a flood of assignats poured forth upon the country in steadily increasing volume. Before the close of 1794 seven thousand millions had been issued, and the year 1796 opened with a total issue of forty-five thousand millions, of which thirty-six thousand millions were in actual circulation. By February of that year the total issue had advanced to 45,500,000,000, and the value had dropped to one two-hundred-and-sixty-fifth part of their nominal value. A note professing to be worth about $20 of our money was worth about six cents.

The Government now came forward with a new scheme, offering to redeem the assignats, on the basis of 30 to 1, for mandats, a new form of paper money, which entitled the holder to take immediate possession, at their estimated value, of any of the lands pledged by the assignats. Eight hundred millions in mandats were issued, to be exchanged for the assignats, and the plates for printing the latter were destroyed. Six hundred millions more of mandats were issued for the public service. At first the mandats circulated at as high as 80 per cent of their nominal value, but additional issues sent them down in value even more rapidly than the assignats had fallen, and in a very short time they were worth only one-thousandth part of their nominal value. It was evident that the end had come. Before the assignats were withdrawn, the Government resorted to various expedients to hold up their value by legislative decrees. The use of coin was prohibited; a maximum price in assignats was fixed for commodities by law; the purchase of specie was forbidden under penalty of imprisonment in irons for six years; and the sale of assignats below their nominal value was forbidden under penalty of imprisonment for twenty years in chains. Investment of capital in foreign countries was punishable with death. All these efforts were as futile as similar efforts had been in John Law's time. The value of the assignats went steadily down. Bread riots broke out in Paris, and the Government was compelled to supply the capital with provisions. When the mandats fell, as the assignats had fallen before

them, the Government was convinced that it was useless to try to give value to valueless paper by simply printing more paper and calling it by another name; and on July 1, 1796, it swept away the whole mass by issuing a decree authorizing everybody to transact business in any money he chose. "No sooner," says Mr. McLeod, in his Economical Philosophy, "was this great blow struck at the paper currency, of making it pass at its current value, than specie immediately reappeared in circulation." In commenting upon this second experience of France with paper money, which lasted for about six years, Professor A. L. Perry, in his Elements of Political Economy, thus graphically and truthfully sums up the consequences: "The distress and consternation into which a country falls when its current measure of services is disturbed and destroyed, as it was in this case, is past all powers of description. The prisons and the guillotine did not compare with the assignats in causing suffering during those six years. This example is significant because it shows the powerlessness of even the strongest and most unscrupulous governments to regulate the value of anything. The assignats were depreciating during the very months in which Robespierre and the Committee of Public Safety were wielding the power of life and death in France with terrific energy. They did their utmost to stop the sinking of the Revolutionary paper. But value knows its own laws, and follows them in spite of decrees and penalties."

91. SOUTH CAROLINA'S FIRST PAPER MONEY'

ANONYMOUS

The first paper money issued in the Province of South Carolina was by virtue of an Act of the General Assembly, May 8, 1703, entitled "An Act for Raising the Sume of four thousand pounds, on the real and personal estates, and of and from the profits and revenues, of the inhabitants of this Province, and establishing bills of credit, for satisfying the debts due by the public on account of the late expedition of St. Augustine."

By this Act £6 000 in bills of credit were stamped and issued, bearing an interest of 12 per cent per annum from the date of the bill to the time the same was paid to the public receiver; and the said bills were to be sunk and cancelled by the tax raised by this Act;

'Adapted from Sound Currency, V (1898), No. 4, pp. 34-44. Evidently written in 1739 by some unknown person.

£2,000 to be raised and paid on February 1, 1703; £2,000 on February I, 1704; and the remainder by means of duties arising by an Act made on May 6, 1703, entitled "an Act for laying an imposition on furrs, skins, liquors, and other goods and merchandize, imported into and exported out of this Province."

By an Act of December 20, 1703, the public receiver is directed to cancel £3,000 of the former bills when the tax assessments shall be raised; and £1,000 in bills at 12 per cent is continued current, any limitation in the former Act notwithstanding.

And by an Act, passed November 4, 1704, reciting "that a great part of the money and bills appropriated by the before recited Acts for particular uses, viz., calling in and sinking the bills of credit, had, for the immediate service and necessary defence of the Province, been, by order of the General Assembly, made use of for other purposes than they were appointed for and appropriated to by the said Acts," it was enacted that such payments should be deemed legal, and the receiver was indemnified and acquitted, as fully as if he had duly applied the same to the uses appointed by the Acts first recited.

On the same day, November 4, 1704, another Act was passed for raising the sum of £4,000 on the real and personal estates, and of and from the profits and revenues of the inhabitants of the Province, to pay and cancel the bills of credit now outstanding. This Act recites "that the urgent necessity for fortifying Charles Town, and other occasions for the defence of the Province against the common enemy, had exhausted the public treasury, and prevented the calling in and sinking the bills of credit. Therefore it was enacted that the bills should continue current, and a tender in law, with the interest of 12 per cent until March 10, 1705; and a tax of £4,000 was imposed, payable on the March 9, 1705, and appropriated for calling in the bills of credit which were then outstanding. A penalty was laid on the public treasurer, that if he misapplied any of the sums so appropriated, he should forfeit treble the value of the sum misapplied, and should be rendered incapable of holding any office in the government.

But after the passing of this Act, another Act was made, on April 9, 1706, entitled "an Act for the sooner and more secure payment of the debts owing by the public, and for the continuing the currency of the bills of credit, commonly called country bills." By this Act, all taxes laid by any former Acts of Assembly, and the duties imposed by the Act passed May 6, 1703, were continued and made current, and three-fourths of the duties before mentioned (after the payment