Lanterna Rally

Author: Andrew White

Publisher:

Published: 2017-08-21

Total Pages: 72

ISBN-13: 9781975647490

"This is one of the best characterizations and descriptions of the effort to finance the French revolutionary period by the issue of paper money. Incidentally the author points out the dangers of excessive issues of paper money." -French Public Finance in the Great War and To-day Andrew Dickson White (1832 - 1918) was an American historian and educator, who was the cofounder of Cornell University and served as its first president for nearly two decades. In 1896 White published the short book "Fiat Money Inflation in France." This book quickly became a respected authority on the history of the effects of hyperinflation caused by fiat money. Regarding fiat money, White writes: "It came by seeking a remedy for a comparatively small evil in an evil infinitely more dangerous. To cure a disease temporary in its character, a corrosive poison was administered, which ate out the vitals of French prosperity. "It progressed according to a law in social physics which we may call the "law of accelerating issue and depreciation." It was comparatively easy to refrain from the first issue; it was exceedingly difficult to refrain from the second; to refrain from the third and those following was practically impossible.It brought, as we have seen, commerce and manufactures, the mercantile interest, the agricultural interest, to ruin. It brought on these the same destruction which would come to a Hollander opening the dykes of the sea to irrigate his garden in a dry summer. "It ended in the complete financial, moral and political prostration of France-a prostration from which only a Napoleon could raise it. "It would be a great mistake to suppose that the statesmen of France, or the French people, were ignorant of the dangers in issuing irredeemable paper money. No matter how skillfully the bright side of such a currency was exhibited, all thoughtful men in France remembered its dark side. They knew too well, from that ruinous experience, seventy years before, in John Law's time, the difficulties and dangers of a currency not well based and controlled. They had then learned how easy it is to issue it; how difficult it is to check its over issue; how seductively it leads to the absorption of the means of the workingmen and men of small fortunes; how heavily it falls on all those living on fixed incomes, salaries or wages; how securely it creates on the ruins of the prosperity of all men of meagre means a class of debauched speculators, the most injurious class that a nation can harbor,-more injurious, indeed, than professional criminals whom the law recognizes and can throttle; how it stimulates overproduction at first and leaves every industry flaccid afterward; how it breaks down thrift and develops political and social immorality. " All this France had been thoroughly taught by experience. Many then living had felt the result of such an experiment-the issues of paper money under John Law, a man who to this day is acknowledged one of the most ingenious financiers the world has ever known; and there were then sitting in the National Assembly of France many who owed the poverty of their families to those issues of paper. Hardly a man in the country who had not heard those who issued it cursed as the authors of the most frightful catastrophe France had then experienced."