Fiat Money Inflation in France
Fiat Money Inflation in France is a scary book. It's not the talk about inflation that's so scary (unless you have a fear of large numbers), it's how people behaved during those inflationary times, and the fact that many of the ideas that were popular back then are still popular to this day!
You still have politicians and economists calling for more government spending, the seizure of property that commits crimes (civil forfeiture), wage and price controls, and penalties and seizure of property for leaving a country to avoid paying high taxes, and other politically created risks.
What happened to people who tried to protect themselves from the mal-effects of inflation and other ridiculous government policies was even worse. Citizens who were found to be hoarding gold and silver coins (specie) had their assets seized and their lives threatened (page 33-34).
Heavy duties were put on foreign goods to save jobs. Blame for the loss of jobs was placed on everything but the real cause. Businesses failed as calculation became difficult; i.e., calculation of costs changed with the rapidly depreciating currency, making it virtually impossible to plan very far into the future. Long-term projects ceased.
Thrift ended, and speculation and gambling became rampant. Bribery and corruption grew, and still there were cries for more money as people began to believe that inflation was "good."
Church properties had long before been seized and eventually, when rich people fled the country, their properties were seized, too (page 49).
When shortages ensued, shopkeepers and farmers were accused of withholding goods even though they couldn't supply the goods at a price above their costs. Mobs formed (page 51), and still, the government needed more money. Additional taxes were levied. Wage and price controls were brutally enforced (Law of the Maximum) with violators subjected to lengthy prison sentences, forfeiture of property, and even death. Fines and the death penalty were also used to punish people who refused to accept the currency or who tried to negotiate a value that differed from the currency's face value. Bad-mouthing the currency was also unpatriotic and therefore a crime.
In the end, Napoleon Bonaparte, the dictator, seized control of France and stopped using paper money. He restored precious metals as money, and waged wars with his neighbors for fifteen years until they finally defeated him.
If people are still laboring under the influence of the same ideas as they were back then, how different will the outcome be today?
Historical Parallels
The patterns documented in this book have repeated throughout history:
- Revolutionary France (1790s) - Assignats inflation led to economic collapse and Napoleon's dictatorship
- Weimar Germany (1920s) - Hyperinflation destroyed the middle class and paved the way for extremism
- Zimbabwe (2000s-2008) - Modern hyperinflation with striking parallels to France
- Venezuela (2010s-present) - Ongoing currency crisis with familiar government responses
The warning signs remain the same:
- Calls for more government spending to solve economic problems
- Wage and price controls to "fight inflation"
- Blaming merchants and speculators instead of monetary policy
- Restrictions on leaving the country or moving assets
- Criminal penalties for refusing government currency
About the Author
Andrew Dickson White (1832-1918) was an American historian, educator, and diplomat. He co-founded Cornell University and served as its first president. White was a keen observer of monetary policy and drew lessons from history that remain relevant today.
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