Assignat

An assignat ([asiɲa]) was a type of a monetary instrument used during the time of the French Revolution, and the French Revolutionary Wars.

France
Assignat from the 1792 issue: 400 livres

Assignats were paper money issued by the Constituent Assembly in France from 1789 to 1796, during the French Revolution, to address imminent bankruptcy. They were backed by the value of properties formerly held by the Catholic Church, which were confiscated, on the motion of Mirabeau, by the Assembly on 2 November 1789, and the crown lands, which had been taken over by the nation on 7 October. Credit was wrecked, according to Talleyrand; for Mirabeau "the deficit was the treasure of the nation". In September the treasury was empty.[1] In November 1789 ecclesiastical possessions were confiscated. Charles Maurice de Talleyrand-Périgord proposed "national goods" should be given back to the nation.[2] Necker proposed to borrow from "Caisse d'Escompte", but his intention to change the private bank into a national bank like the Bank of England failed.[3] A general bankruptcy seemed certain.[4][5] On 21 December 1789 a first decree was voted through, ordering the issue (in April 1790) of 400 million assignats, certificates of indebtedness of 1,000 livres each, with an interest rate of 5%, secured and repayable based on the auctioning of the "Biens nationaux".[6] The assignats were immediately a source of political controversy. Constitutional monarchists such as Maury, Cazalès, Bergasse and d'Eprémesnil opposed it. While their proponents, like other eighteenth-century advocates of "land banks," argued that land was a more stable source of value than was gold or silver, the assignats' opponents saw them as based on an illegitimate seizure of property.

The assignats were first to be paid to the creditors of the state. With these the creditors could purchase national land, the assignats having, for this purpose, the preference over other forms of money. If the creditor did not care to purchase land, it was supposed that he could obtain the face value for them from those who desired land. Those assignats which were returned to the state as purchase-money were to be cancelled, and the whole issue, it was argued, would consequently disappear as the national lands were distributed.[7]

The value of Assignats (1789-1796)

Originally meant as bonds, the assignats were re-defined as legal tender (assignats-monnaie) in April 1790 to address the liquidity crisis provoked by the political, social, and cultural instability of the Revolution.

1790-1792
See also: William Playfair § Counterfeiting operation

Étienne Clavière lobbied for large issues of assignats representing national wealth and operating as legal tender.[8] On 17 April 1790, the notes were declared legal tender but their interest was reduced to 3%.[9] For daily life smaller denominations of 200 and 300 livres were needed. The assignats would compensate for the scarcity of coin and would revive industry and trade.[10] Once the assignats were paid, they had to be burnt. A surety was prepared for future issues of paper money?[11] As soon as the assignats started to circulate, their value decreased by 5 percent.[12] Du Pont de Nemours feared the emission of assignats would double the price of bread.[13]

Necker himself argued at the National Assembly on 27 August that the assignats were a paper money which would bankrupt France.[14] Talleyrand had also attacked them on the grounds that they risked the same fate as Law's schemes. Camus stressed what he believed was the lesson of American experience of paper, which had undermined metal money and sent prices spiralling.[15] Condorcet and Du Pont de Nemours argued that the assignats would drive out silver and other forms of coin, raise prices relative to paper, and thereby dangerously restrict commerce. All of these writers preferred the issue of treasury bills at interest through the Caisse d'Escompte, a revised tax-system, and increased loans.[8]

On 27 August 1790 the Assembly decided another issue of 1,9 billion assignats which would become legal tender before the end of the year for all actions, c.q. banknotes, which could be acquired by anyone and used for ordinary business transactions. Necker, suspected of reactionary tendencies, resolutely against the transformation of the assignat into paper currency, handed in his resignation on 3 September.[16] The massive and dangerous issue of 1,9 billion he succeeded to get down to 800 million, but the attacks may have influenced his resignation.[17][18] Necker was not backed by Comte de Mirabeau, his strongest opponent who called for "national money".[19]

By September 1790, all authorized assignats had been paid out by the government. Supporters of the paper money argued that since the assignats were secured by land, more notes could be safely issued as long as they were retired and burned at the same rate that the lands securing them were sold. On 29 September 1790, the National Assembly authorized a further issue of 800 million livres and abolished interest on the assignats altogether.[20])

Necker foretold that the paper money, with which the dividends were about to be paid, would soon be of no value. Since no one had truly the right to make assignats, everyone would soon begin to do so.[5] Montesquiou-Fézensac, charged with the issue of assignats, feared stockjobbing and greed.[21]

By September 1790, the assignat had become a true circulating paper currency, and 800 million livres worth of non-interest bearing notes were added to the initial issue, in denominations of 50, 60 70, 80, 90, 100, 500, and 2000 livres with legal-tender status. The lower denominations were produced in large numbers in order to ensure wide circulation. This change stimulated the economy but also increased inflationary pressures.[22]

Assignat of 4 Jan 1792, still bearing Royal markings: 15 sols

When the cost of reimbursing Old Regime venal office holders for their properties (judgeships, military ranks etc.) added yet more to the Revolution's inherited debts, the National Assembly voted by a narrow margin to issue additional assignats in September 1790,[23] initially of an additional 800 million francs.[24] By September 1791, the value of the assignats had depreciated by 18-20 percent.[25]

The properties backing the assignats were renamed biens nationaux ("national goods") and auctioned by district-level authorities. On 10 March 1790, on the proposition Pétion, the administration of the church property was transferred to the municipalities.[26] Through the sale of these properties, assignats were used to successfully retire a significant portion of the national debt. However, since these land sales were their original intent, the assignats were issued only in large denominations (50, 100, 200, and 1000 livres) that worked poorly as a daily medium of exchange. Moreover, the National Assembly never mandated that assignats and Old Regime coins (which remained in circulation) had to be exchanged on par. Already in fall 1790, the National Assembly itself was paying a 7.5% commission to exchange large denomination assignats for smaller coins. By the end of 1791, the discount rate was often 20% or more.[27] These limits on the bills' practical use, and further issues eventually totalling 3.75 billion francs,[24] coupled with the organized opposition of counter-revolutionaries, led to their losing value. On 1 February 1792 the assignats depreciated almost with 50%.[28]> Patriotic revolutionaries blamed the assignats' depreciation on foreign conspiracies. Dillaye wrote that the British, Belgian, and Swiss counterfeited the currency industrially: "Seventeen manufacturing establishments were in full operation in London, with a force of four hundred men devoted to the production of false and forged Assignats."

After the outbreak of war, the fall of the monarchy, and the declaration of a Republic, the National Convention mandated that bills and coins exchange on par, but this law could never be enforced. Instead, the assignats continued depreciating. Rising prices and food shortages exacerbated public unrest. Bills such as the Maximum Price Act of 1793 aimed to address this situation. The Thermidorian Convention lifted the Maximum Price Act in the name of "economic freedom" and the assignats lost almost all value over the next year. By June 1794 the total number of assignats aggregated nearly 8 billion, of which only 2,464 million had returned to the treasury and been destroyed; emission of 1,205 million assignats on 19 June. The extension of the "maximum" to all commodities only increased the confusion. Trade was paralysed and all manufacturing establishments were closed down.[7] By 1796 the issues had reached 45.5 billion francs, excluding counterfeits, and the Directoire issued Mandats, a currency in the form of land warrants to replace the assignats, although these too quickly failed and were received back by the state at a steep discount.[24] Napoleon opposed all forms of fiat currency. By the 1830s–1840s, the assignats and other papers issued during the Revolution had become collectors' items.

Italy
An eight-paoli Roman Republic assignat (1798).

Between 1798 and 1799, the revolutionary French forces established the Roman Republic, which also issued assignats (Italian: assegnati). They were issued by the law of 23 Fructidor VI (14 Sept 1798). The currency used was paolo or giulio, the older currency of the Papal States. Roman Republic also issued coins denominated in baiocco and scudo.

Russia
Russian assignation ruble (1807)

The term assignat is similar to the Russian word assignatsia which means "banknote". Assignatsionny rubl (assignation ruble) was used in Russia from 1769 until 1 January 1849. This had no connection to the French Revolution.

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See also

References
  1. François Crouzet (1993) La grande inflation : La monnaie en France de Louis XVI à Napoléon, pp. 97–98
  2. Crouzet, F. (1993) La grande inflation, p. 101
  3. Crouzet, F. (1993) La grande inflation, pp. 104–105
  4. The French Revolution: An Economic Interpretation by Florin Aftalion, p. 59
  5. Stuff and Money in the Time of the French Revolution by Rebecca L. Spang
  6. THE FRENCH REVOLUTION, THE ASSIGNATS, AND THE COUNTERFEITERS
  7.  One or more of the preceding sentences incorporates text from a publication now in the public domain: Ingram, Thomas Allan (1911). "Assignats". In Chisholm, Hugh (ed.). Encyclopædia Britannica. 2 (11th ed.). Cambridge University Press. pp. 781–782.
  8. Whatmore, Richard (1996) "Commerce, Constitutions, and the Manners of a Nation: Etienne Clavière's Revolutionary Political Economy, 1788–1793". History of European Ideas 22.5-6 (1996): 351–368. Web.
  9. The French Revolution: An Economic Interpretation by Florin Aftalion, p. xii
  10. The French Revolution: An Economic Interpretation by Florin Aftalion, p. 80, 95
  11. The French Revolution: An Economic Interpretation by Florin Aftalion, p. 76
  12. Levasseur, E. "The Assignats: A Study in the Finances of the French Revolution". Journal of Political Economy. 2: 182. doi:10.1086/250201.
  13. The Money and the Finances of the French Revolution of 1789: Assignats and Mandats: A True History: Including an Examination of Dr. Andrew D. White's Paper Money Inflation in France by Stephen Devalson Dillaye, p. 18
  14. 'Contre l'émission de dix-neuf cents millions d'assignats', Œuvres complètes de Jacques Necker (Paris, 1821), vii, 430-447.
  15. De l'opinion de M. Camus, (Paris, 1789)
  16. Stael, Germaine de (1818). Considerations on the Principal Events of the French Revolution. Baldwin, Cradock, and Joy. pp. 256-258.
  17. Crouzet, F. (1993) La grande inflation, p. 115
  18. Histoire de la révolution française: depuis l'Assemblée des notables ... by Jacques Necker, p. 35
  19. A.D. White (1878) The Assignat|Ann Arbor Library
  20. Guide to the French Currency Collection 1791-1796. University of Chicago Library (2012)
  21. Opinion de M. de Montesquiou sur les assignats-monnoie..., p. 3
  22. Tales from the Vault: Money of the French Revolution – the Assignat by Douglas Mudd, ANA Money Museum curator / museum director
  23. Spang, Rebecca (2015). Stuff and Money in the Time of the French Revolution. Cambridge, MA and London: Harvard University Press. pp. 57–96.
  24. Ingram 1911.
  25. Levasseur, E. "The Assignats: A Study in the Finances of the French Revolution". Journal of Political Economy. 2: 185. doi:10.1086/250201.
  26. Crouzet, F. (1993) La grande inflation, p. 110
  27. Spang, Rebecca (2015). Stuff and Money in the Time of the French Revolution. Cambridge, MA and London: Harvard University Press. p. 159.
  28. Press in the French Revolution by John Thomas Gilchrist, p. 261

Further reading
  • Media related to Assignat at Wikimedia Commons
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