I am greatly indebted to the generosity of Mr. Andrew D. White, the
distinguished American scholar, author and diplomatist, for permission
to print and to circulate privately a small edition of his exceedingly
valuable account of the great currency-making experiment of the French
Revolutionary Government. The work has been revised and considerably
enlarged by Mr. White for the purpose of the present issue.

The story of "Fiat Money Inflation in France" is one of great interest
to legislators, to economic students, and to all business and thinking
men. It records the most gigantic attempt ever made in the history of
the world by a government to create an inconvertible paper currency,
and to maintain its circulation at various levels of value. It also
records what is perhaps the greatest of all governmental efforts--with
the possible exception of Diocletian's--to enact and enforce a legal
limit of commodity prices. Every fetter that could hinder the will or
thwart the wisdom of democracy had been shattered, and in consequence
every device and expedient that untrammelled power and unrepressed
optimism could conceive were brought to bear. But the attempts
failed. They left behind them a legacy of moral and material
desolation and woe, from which one of the most intellectual and
spirited races of Europe has suffered for a century and a quarter, and
will continue to suffer until the end of time. There are limitations
to the powers of governments and of peoples that inhere in the
constitution of things, and that neither despotisms nor democracies
can overcome.

Legislatures are as powerless to abrogate moral and economic laws as
they are to abrogate physical laws. They cannot convert wrong into
right nor divorce effect from cause, either by parliamentary
majorities, or by unity of supporting public opinion. The penalties
of such legislative folly will always be exacted by inexorable time.
While these propositions may be regarded as mere commonplaces, and
while they are acknowledged in a general way, they are in effect
denied by many of the legislative experiments and the tendencies of
public opinion of the present day. The story, therefore, of the
colossal folly of France in the closing part Of the eighteenth century
and its terrible fruits, is full of instruction for all men who think
upon the problems of our own time.

From among an almost infinite variety, there are four great and
fundamental facts that clearly emerge, namely,--

(1) Notwithstanding the fact that the paper currency issued was the
direct obligation of the State, that much of it was interest bearing,
and that all of it was secured upon the finest real estate in France,
and that penalties in the way of fines, imprisonments and death were
enacted from time to time to maintain its circulation at fixed values,
there was a steady depreciation in value until it reached zero point
and culminated in repudiation. The aggregate of the issues amounted
to no less than the enormous and unthinkable sum of $9,500,000,000,
and in the middle of 1797 when public repudiation took place, there
was no less than $4,200,000,000 in face value of _assignats_ and
_mandats_ outstanding; the loss, as always, falling mostly upon the
poor and the ignorant.

(2) In the attempt to maintain fixed values for the paper currency the
Government became involved in an equally futile attempt to maintain a
tariff of legal prices for commodities. Here again penalties of
fines, of imprisonments and of death were powerless to accomplish the
end in view.

(3) An wholesale demoralisation of society took place under which
thrift, integrity, humanity, and every principle of morality were
thrown into the welter of seething chaos and cruelty.

(4) The real estate upon which the paper currency was secured
represented confiscations by the State of the lands of the Church and
of the Emigrant Noblemen. These lands were appraised, according to
Mr. White's narrative and other authorities, at $1,000,000,000. Here
was a straight addition to the State's resources of $1,000,000,000.
It is ominously significant that within one hundred years under the
"Peace of Frankfort" signed on the 10th May, 1871, the French nation
agreed to pay a war indemnity to victorious Germany of exactly the
same sum, namely, $1,000,000,000 in addition to the surrender of the
province of Alsace and a considerable part of Lorraine. The great
addition to the national wealth, therefore, effected by the immoral
confiscation of the lands in question disappeared with compound
territorial interest added under the visitation of relentless
retribution.

Public opinion in our own country is so far sound on the question of
currency, but signs are not lacking in some lay quarters of an
inclination to sanction dangerous experiments. The doctrine of
governmental regulation of prices, has, however, made its appearance
in embryo. Class dissatisfaction is also on the increase. The
confiscation of property rights under legal forms and processes is apt
to be condoned when directed against unpopular interests and when
limited to amounts that do not revolt the conscience. The wild and
terrible expression given to these insidious principles in the havoc
of the Revolution should be remembered by all. Nor should the fact be
overlooked that, as Mr. White points out on Page 6, the National
Assembly of France which originated and supported these measures
contained in its membership the ablest Frenchmen of the day.

JOHN MACKAY.
Toronto General Trusts Building,
Toronto, 31st March, 1914.