French Revolutionary assignats
The National Assembly issued the first assignats in April 1789, notionally backed by confiscated Church lands that the state would sell. Within three years, the government was issuing assignats faster than land could be sold to back them. By 1795, roughly 40 billion livres of assignats were in circulation against a nominal backing of perhaps 3 billion livres of land. By February 1796, the assignat had fallen to 0.5 percent of face value, and the National Convention ordered the printing plates publicly burned. The assignats were briefly replaced by a second paper currency, the mandats, which collapsed in under a year.
The public burning of the assignat printing plates in February 1796 was partly ceremonial, partly sincere. Napoleon, who seized power three years later, returned France to a metallic standard (the franc germinal) in 1803 specifically because the Revolution had destroyed public trust in paper — and that franc remained stable for roughly a century.
03 · First Paper Bubbles
The invention of paper money in Western economies (borrowed conceptually from Song Dynasty China) introduced a new debasement mechanism: issuing more paper claims on gold or silver than the issuer actually held. The first Western paper monies were issued by the Massachusetts Bay Colony in 1690. Within 30 years, John Law's Banque Royale in France had demonstrated the catastrophic potential at industrial scale. Every paper-money experiment of the 18th century — Continentals, assignats, Bank of England wartime notes — followed the same pattern: issue, over-issue, collapse.
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