The French Revolution's disastrous money experiment - Part 2

0:00What happens next in the story of money? Nuveen has spent over 125 years helping clients answer this question. By investing in the growth of businesses, real estate, infrastructure and natural capital, we continue to deepen our expertise across income and alternatives so investors can confidently write the next chapter of their own portfolio stories. Nuveen. Invest like the future is watching. Visit nuveen.com slash future to learn more. Investing involves risk. Principal loss is possible. Today on the story of money. How the French Revolution's fight for liberty also was a fight over money. So the reign of terror is now kicking off.

0:39They do not want to keep producing chaos. They want the chaos to end. But since they have chaos, they say, oh, well, how about if we try this? So they just start printing tons and tons of assignats. The assignats very, very quickly loses value. Napoleon becomes France's leader. And I'm curious whether you think the roots of his power, whether that essentially grew out of all this economic chaos.

1:09In today's episode, we're going to be talking about the French Revolution. If you want to hear all about the lead up to the infamous moment of the storming of the Bastille, you can find out about it on our last episode. But today, we're going to get stuck into the time of the executions of Louis XVI and Marie Antoinette, when the reign of terror paralyzed France. And already creaking under economic instability, despite the introduction of a whole new currency, there's a huge amount of political and social unrest. Did all this economic chaos lead to the rise of Napoleon and his empire? We'll be finding out.

1:50This is the story of money. Jillian's away this week, and I'm Robin Wigglesworth. And to tell this story, we have Rebecca Spang back once again. Rebecca is a professor of history at Indiana University. She's also the author of The Wonderful Stuff and Money in the Time of the French Revolution, which this time I have now brought down from my bookshelf upstairs. Rebecca, welcome back to the story of money. It's so great to have you here with us again. Well, thank you. I wasn't going to leave you hanging in 1790. No, no, that'd be terrible. It was such a cliffhanger moment to end on. So I'm glad we can tackle, frankly, you know, the reign of terror.

2:27We can't really do the French Revolution without tackling the reign of terror. So Rebecca, we ended last week's episode in the summer of 1790. It was a hot and sticky summer in Paris. There's so much going on. There's a National Assembly meeting to figure out what to do with the country. And nobody really knows. King Louis XVI, our rather overweight monarch, is still the head of state, at least in theory. But his power is damaged and France is on its way to establishing a constitutional monarchy. The government has started issuing assignats, a nifty financial innovation that began as an interest-bearing short-term debt instrument, but is fast being used as paper money.

3:10But France is broke, so the big question is how can a country pay off its debts? In the summer of 1789, they vow to abolish privilege and they pass something called the Declaration of the Rights of Man and the Citizen. And the knock-on effect is suddenly they realize they have to redo the entire country. They have to create administrative districts. They have to figure out what the administration is going to look like. They have to figure out how social services are going to run. They have to figure out how the judiciary is going to work. They have to figure out everything. And they have to figure out the money and the debt.

3:48And I'm curious. I mean, these are big, important questions that, frankly, many countries have wrestled with. How do they figure out what to do with these assignats that we talked about last week? This kind of this proto-currency or slash short-term debt that they issued back by nationalized church property that they seized and used as security as collateral for these assignats. What do they decide to do about this? So there's an extremely heated, extremely long debate in 1790. They finally vote on it. And you can tell what a hot button issue this was is because it's one of the three votes in the National Assembly where they actually take a roll call vote.

4:39And that may seem like, oh, sure, that's fine. But remember, you know, this is 1 ,200 people and there are no computers. You've got to call out the names one by one, 1 ,200 of them, and say, how do you vote on this? And then there's actually a printed record of who votes for issuing more assinia to pay off the short term debt and who votes against it. So there's going to be a permanent record of where you were on this issue, which gives you some indication of just what a major source of contention it was. And by a quite small margin, the votes that say let's issue more assinia carry the day. Yeah, because some people said that the assignats were illegal.

5:24This was based on seized property. And some people said, well, this is just the way it has to be. And in fact, given that there's this acute shortage of something that kind of walks, talks and quacks like money in the French economy and is struggling because of this, this is essential. So they issued, what was it, 800 million livres of assignats? assignats? Yes. So livre in the old regime is the unit of currency. I mean, I know that if you studied any French at all, you know le livre is a book, but la livre is the pound, and that's the unit of currency. And that really ought to have taken care of the debt problem that on paper solves things.

6:10In terms of the actual day-to-day functioning of the economy, it perhaps causes more problems. So these assignats did not pay interest? They did not pay interest like the original one? That's right. So these new ones do not pay interest. They're really meant to circulate like money. But the smallest one is still going to be for 50 leaf, which is much smaller than the original, but it's still, it'll buy you 20 nice dinners in a French restaurant, in a Paris restaurant, and nobody needs 20 nice dinners, right? So there's a real problem that the first Assignat, even, you know, 317-90, they're in denominations that are too large for retail use.

6:54And because they're very worried about the threat of counterfeiting, the first Assignat have very high production values. They're slow to manufacture. Each one is numbered and signed by hand. And the engraver is making minute little differences in his engravings because he thinks that's a good way to track potential counterfeiters. So they're slow to make. They're slow to get into circulation. And then when they're in circulation, they cause a bottleneck because they use up all the change. We actually have a picture of them here. Yeah, it kind of looks like, I guess, paper money. It has a picture of some dude.

7:37It's usually some guy in the middle of it. That dude is Louis XVI. Louis XVI. So he still has his face on there. Okay, that's interesting. It has his face on it. So what it is actually is it looks like a 17th or 18th century bill of exchange, and it has a representation of a coin. So again, it's meant to be this sort of hybrid paper, which circulated between individuals, coin, which circulated notionally, universally. It's meant to do both. Okay, yeah. And I see this picture of Lou XVI, our chubby anti-hero. He still has his head attached to his shoulders still. So it's interesting that even at this time of revolution, we kind of know where it's going.

8:21Remember, nobody knew where it was going. No, that's true. We know, but they didn't know. They still have the king there. That is the hardest thing to teach people when you're a historian. People in the past don't know what happens next, much as we don't know right now what's going to happen next year. And nobody, nobody in the summer of 1789 or the summer of 1790 thought that France was going to become a republic. France was too big. It had too long a history as a monarchy. No, they're not going to have a republic. They're going to have a king. is going to be a constitutional monarchy like they have in Britain.

8:55And that's what people expect is going to happen. But, you know, history is a long story of people's expectations not really getting met. Well, so we have these assignats now. They still boast the face of the king. They are too high denominations really to work as everyday currency. What ends up happening is that literally thousands of bodies all across the country, probably starting with merchants in Bordeaux, which is, you know, a trading hub. It's a port city. They start issuing their own small change. And they say, you know, this isn't going to be inflationary. And what is this backed by? It's backed by an assinia.

9:39So I have this asinja for a thousand leaves. And I'm going to take it and I'm going to lock it up in my desk. And my desk has three locks on it and three different people have the keys. And so it's really secure. So there's what's going to back it. And then I'm going to make a thousand pieces of paper, each good for one leave. Well, that's OK. I haven't created any additional value. It's all backed by the thousand that I have secured in my desk. And so you know where these ones are coming from. I will sign it and then I'll have some other people sign it too. And then we can use this as a small change.

10:19So one merchant in Bordeaux does this and then another merchant and then merchants in Lille and then municipalities. So like an entire town will say, oh, OK, great. We'll lock up 2000. We'll make 2000 pieces of small change. And now we can buy office supplies. Now we can pay the clerks. And so by early, early, mid 1791, there are probably 3000 different issuers of these. And they all look different. And they all have different signatures on them. Yeah. I mean, Rebecca, I'm starting to suspect this is one of those great idea on paper. But in practice, it starts breaking down quite dramatically.

11:05Right. Right. So it works fine locally. But if you travel at all, then you've got a piece of paper signed by somebody maybe you don't know and signed and you're trying to pass it to somebody else. None of it is forced circulation. It's all voluntary. So you go to the market and the merchant can say, no, I've never seen one of those before. I'm not going to take that. Oh, I recognize that one. I'll take it at half the face value. And none of this, not even the Asenia, has to be accepted at face value. So it's already trading at a discount with coin. There were so-called patriotic butchers who said, I'm going to take the Asenia at face value because I believe in the nation.

11:56I believe in France. I believe in the revolution. And then their neighbor might say, yeah, well, but I actually can't buy cows and pigs with this stuff. So I'm only going to take it at 20 percent off. Well, it sounds like it's quite a complicated mess. We want to get into some of the mess that this causes, but I'm curious, what's going on with Louis XVI, a slightly chubby royal friend, the King of France whose face is on these assignats? What happened to him after the storming of the Bastille? Right. So after the storming of the Bastille and after the Women's March, which is when a large number of market women from Paris and others, I mean, they're joined by the National Guard, by Lafayette, march from Paris to Versailles.

12:45It's a long walk in demand that the royal family move to Paris because they feel that because the royal family is still out at Versailles, they don't really understand the plight of the common people. The royal family moves back to Paris and Louis, again, continues to vacillate. Does he like this? Does he want to be popular? Maybe he doesn't like it. But right from the beginning, Marie Antoinette and her Austrian relatives hate the revolution. And they are really, really worried that this could spill over and happen in Austria or the Austrian Netherlands as well. In this context, Marie Antoinette and her relatives plot for the entire royal family to run away.

13:32They're going to get out of France and get to the security of something Austrian. That's called the Flight to Varennes. It happens in June 1791. So imagine the situation for the National Assembly. They've been writing a constitution for a constitutional monarchy, and then the monarch tries to run away. Oh, that sounds quite messy. The members of the National Assembly who have spent so long writing a constitution for a constitutional monarchy, they're not going to say, oh, well, forget that. They say, oh, unfortunately, the king has been king-enact, but we've managed to get him back. And he really loves the constitution.

14:16See, he just said he loves the constitution. OK, he loves the constitution. Great. We have a constitutional monarchy. Goodbye. And they actually vote themselves out of existence. And then there's a new body created, the Legislative Assembly, which doesn't have any of the same members as the National Assembly. And that's 1792. And then France declares war on Austria. Why does France declare war on Austria? For fomenting counter-revolution, for harboring the émigrés. So remember, the king's brothers have fled the country and they're building up armies. And so they're they're being harbored somewhere.

14:58And that doesn't look so good from within France. And then somewhere, I think it's like item 25 or something on the causes of war is and the Austrians and the British are trying to discredit the Assyrians. Oh, wow. OK, that's interesting. They don't even like our land in a form that could circulate. Well, I can understand why they frown on this sort of incipient monetary disaster. But so essentially, so Louis is now being kidnapped. And by the way, that's an amazing term. I'm definitely going to be using that more, even though it doesn't happen a lot in history, unfortunately. But he's been kidnapped back to France, Louis and his family.

15:38but they are increasingly now seen as traitors because they're kind of allied to the Austrians and the Germans who want to restore the absolute monarchy and and this new legislative assembly they decide to abolish the monarchy then right and declare a republic yes yes there's a there's a moment of crisis in which a commander of one of the German armies says that he's going to march on France. And if there's any damage, any harm done to the royal family at all, anybody who doesn't welcome the invading army, there will be exemplary violence. So he's basically saying, you know, we're going to burn Paris to the ground.

16:21And the Parisians and others are like, look, it has obviously come to the point where it's us against the monarch who's allied with these foreigners. We're getting rid of the monarchy. We're declaring a republic. So, Rebecca, what happened to Louis XVI? I guess the new government doesn't really know what to do with him immediately, right? Because once you declare a republic, you don't have a use for a king. And many people believe that he's been conspiring with France's foreign enemies. So the convention, this new body that has to write a constitution for a republic, has a debate that goes on for about a month about how do we decide what to do with this guy who used to be king.

17:08And some people argue that because he used to be king, he obviously has committed crimes against a republic because a republic has no kings, as the saying goes. And others argue, well, no, we need to actually get this clearer. So they eventually decide, all right, we need to have a trial. And then the trial goes on for weeks. They convict him of crimes against France. And then they have another debate. Well, what should the punishment be for crimes against France? And the eventual conclusion is to execute him. Because if you let him live, he will be a figurehead. People will gather around him.

17:47No, I mean, understandably so. It's almost just realpolitik, I guess, at that stage. Can you tell us a little bit what the scene must have been like when Louis XVI loses his head when he's marched to the guillotine in Paris? Right. So, I mean, remember, there is, of course, a precedent for this, which is the execution of Charles I. Images from that moment do circulate in 1793. But so the guillotine in Paris is set up at the Place de la Concorde. So right there, sort of beside the Louvre, facing Tour de Champs -Élysées. It's a big open space. There's a space for a crowd of thousands, maybe tens of thousands.

18:26The guillotine has been introduced by Dr. Guillotin as a humanitarian measure, because the way that ordinary people were executed in the old regime was by hanging, which takes hours and is cruel. And again, it was a big spectacle, whereas members of the nobility could have their head cut off by an executioner. But, you know, you don't necessarily have enough executioners and some of them aren't very good at their jobs. But if you can mechanize it, you can make sure that it's much more efficient and that the machine works every time. So Louis is led to the guillotine. The blade is dropped. The executioner holds up his head to show to the crowd to say, see, this is really the end of him.

19:15And the body is thrown on a pile with the other bodies. Wow. I have to admit, I didn't know that the guillotine was kind of almost a socially responsible way of execution in the time of the French Revolution. But his body was just thrown in among all the parts of everybody else that was being executed then. Yeah, because you don't want to make a site for murderdom. Rebecca, what happens with Marie Antoinette, his Austrian controversial wife? She's left in prison for a while, and then they realize she's in prison, and they haul her out and denounce her, bring a whole series of charges against her, including actually that she had seduced her son, which seems improbable.

20:01But they're just piling on all the accusations they can think of. And in October of 1793, she too goes to the guillotine. Their children do or do not survive. There's some mystery around that. And of course, his brothers are outside of the country, busy organizing armies. So, Rebecca, one of the most memorable moments in the French Revolution, really in world history, has just taken place. Louis XVI, he was beheaded on January 21st, 1793 in the Place de la Concorde in the center of Paris. What happens to the French government next? And importantly to our story, what happens to the Assignats? That's really what I want to dig into now.

20:44So situation in France at this point is that there's a new body of 700 elected representatives, including a number of people who had served in the National Assembly. This is called the National Convention. And it has two jobs. One is to write a constitution for a republic. And the other is to manage everything. So it's going to fight the war. It's going to fight the civil war. It has to try to develop a colonial policy. It's doing all of those things simultaneously. And it has to deal with the repercussions from the failure of one of the biggest issuers of the private small change. So in the wake of that disaster, the convention says, you know what?

21:32Hold on. Wait a minute. We're the government. We make the money. All of this locally issued small change, it's got to go out of circulation. These are their billets de confiance that individual merchants have been issuing. Individual merchants, municipalities, little political clubs. The convention says, no, none of that can circulate after, I think it's January 93. You know, if you're going to try to circulate it, you've got to pay a tax on it. They really are going to try to rein in this proliferation of privately issued small change. They do that in part by changing how they manufacture the assignat.

22:14So they really do develop a mass production system so that they can make more small denomination bills and get them out there quickly as possible. So they're no longer going to each be individually signed, for instance, which was somewhat slow. So they try to centralize that. But they're not really in a very good position because their predecessors had said, you know, it's a free country. You can do whatever you want. So to say, no, actually, you can't do whatever you want doesn't look like you're so supportive of freedom. No. Well, that's quite a problem, given everything going on and the rhetoric at the time.

22:53But I understand why the National Convention is trying to bring some order back to the currency and back to the economy. But does it work, though, at this time of immense tumult? It's a time of immense tumult. And so one thing they try to do is they say the Asinia, the earliest Asinia that were issued, the ones that have the picture of the former king, they're not going to be valid after a certain date. Understandably so. Right, which would seem to make sense, except once you put into circulation the possibility that some of the Asenia are not valid after a certain date, people start to be suspicious.

23:33Well, what about this one? So that makes people nervous. Then there is a period which is often called the reign of terror from 93 to 94, where the convention imposes wage and price controls and mandatory acceptance of the assenia at face value. Well, this reign of terror is obviously such a crucial phase. But can you tell us what it meant in practice? Because I imagine that a reign of terror involves more than wage and price controls. The important thing to know is that a crowd in Paris marches on the National Convention and says, we want you to declare terror the order of the day. Now, hold on, wait a minute.

24:18What do they mean? Well, remember Louis XIV who built Versailles, he was the terror of his enemies. All right. So the idea is what they want is sort of a policy of no compromise, take no prisoners. We want to win. We're sick and tired of this chaos, of this nonsense. Let's be clear about what we're doing. The National Convention actually never does say we're going to make terror the order of the day. But in retrospect, this gets called the reign of terror. And they do jail an enormous number of people as suspected enemies of the revolution. So the reign of terror is now kicking off. It's a bloody moment in French history, especially if you add in all the other death and destruction and chaos that's happening around France at the time.

25:09But what happens to France's financial picture, the stuff that I care about? Well, we're going to be covering that after the break.

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26:00And we are back. And we are deep into this era that is known as the reign of terror. Now, let's talk about one of the figures who's most tied up in that era. And that is Maximilian Robespierre. But you tell us a bit more about Maximilian Robespierre. What was his background? What was his role during this time? Right. OK, so Robespierre becomes the sort of figurehead for terror. And the thing to know about Robespierre is he's young, as are most of the leading revolutionaries. He's a lawyer from the north of France, from Autrennes. He's a member of the National Assembly. And unlike many other politicians of this era, he's a man of absolutely unswavering convictions.

26:49He was known as the incorruptible. He couldn't be bought. He didn't seem to drink very much. He wasn't a womanizer. But he had principles. So he actually was one of the people who spoke at greatest length against the death penalty. So his reputation is as somebody very bloody, somebody who's always sending people the guillotine. But really, those were not his principles. That's sort of the position he finds himself in trying to defend the republic. And I mean, I guess it's a question today, what do you have to do to defend a republic, to defend a democracy, if the winds are going in a kind of anti-democratic, anti-republic direction?

27:37We actually have a portrait of him here. I mean, he is in many ways the antithesis to Louis XVI. He looks severe. He looks gaunt. He looks quite like a serious guy who probably is not a ton of fun at a party, I have to admit, Rebecca. Notice that he's wearing a powdered wig, as he did throughout his life. For all that he's considered a radical, he did not embrace the sort of new vogue for natural hair or casual clothing that a few of his colleagues did. It sounds like a complicated character, but I have to admit, if a teetotal lawyer, that Definitely doesn't sound like somebody I trust. But lawyers, you know, they're always lurking behind every bad event in history.

28:28But during this reign of terror, and you talked about how they, you know, forcing people to accept the ASIC Nats, these new ASIC Nats at their face value was a part of it. How is the government thinking about money and does that change at all? Well, I mean, they try to consolidate the debt. So at this point, they still had on their books some debt that, you know, paid 7 percent and some paid two and a half percent. And some was due now and some was due whenever. And they try to consolidate that and make something like the British consolidated debt, which is a sort of model that they're following.

29:03So they're trying, again, to rationalize and modernize various aspects of the debt. Robespierre doesn't really have a hand in that. He's not a money guy. He really isn't. But the point at which other people in the convention start to think Robespierre has really gone around the bend and he's going to come for us next. We better do something about it is when he denounces Joseph Cambon, who was the sort of leading speaker on monetary issues in the convention. And at that point, people are like, oh, we just don't know where Robespierre is going next. We've got to get him out of here. Well, it seems like, I mean, almost understandably at such a time of upheaval that France is flaming from one potential solution to the next.

29:51At first, they have the assignats, a sort of a quasi bond that pays the interest back by land seized from the church. Then they have assignat monet and they kind of iterates and they iterates and keep trying to find something that kind of sticks. Does the reign of terror approach to money and debt stick, essentially? Have they managed to turn this into a consolidated bond? Right. So I think that's a very good way to think about it, right? That what they want to do, they do not want to keep producing chaos. They want the chaos to end. But since they have chaos, they say, oh, well, how about if we try this?

30:28But, you know, if you keep changing what you're trying, the effect is that people feel like they're living through chaos. Even if what you're really trying to do is stop the chaos. And that, I think, is a very good way to understand the sort of chops and changes of monetary policy in France through this period. So the brief period when the convention tries to force the circulation of the Assignia. And I mean, of course, that is what governments do today. So it's not a crazy radical thing to do. And it sounds when it's backed by something called the reign of terror, I'd take it quite seriously as well.

31:09I mean, you'd think it sticks. Right. You would think it sticks. But then there's another turn in the revolution, the event called the Ninth of Thermidor, where Robespierre and his closest allies in the Committee of Public Safety are themselves denounced as enemies of the republic and sent to the guillotine. Well, I guess all revolutionaries end up eating their own eventually. But is this another turn then for money at the time of the French Revolution? What happens then? Yes, because what's going to happen is that in the aftermath of that, the members who are left in the National Convention, generally men who do not have any principles at all and who drink quite heavily and are womanizers, not all of them, but many, they say, oh, don't worry.

32:04Terror's over. That was all Robespierre's fault. And to prove that we're not terrorists, we are going to stop enforcing wage of price controls. We are going to stop mandating the circulation of the Assyria at face value. This is what liberty is. You can use whatever money you want. But that does not, I'm guessing, again, this does not end up well for France either, right? No, no, because after that brief period where it's similar to Asenia was sort of stabilizing in value, if you've got another government that comes along and says, whatever, do whatever you want, the Asenia very, very quickly loses value where people who have something hard to sell.

32:51And often, of course, that's farmers say, no, I know that bill says a thousand, but I'm only taking it for a hundred. And in that situation, the only way to have enough money to pay for, say, what the army needs is to print more of it. OK, so they just start printing tons and tons of assignat. It is completely unanchored from that initial idea that it was backed by church land and assets. It's not completely unanchored because they still don't really know how much church land there is. And they've also confiscated property from families that have fled the country. but it's not very tightly anchored at all.

33:31And yes, they're just at this point in late 94, 95, they've just got the printed presses going 24 hours a day. So not hand signing every single S-ignat anymore? No, that's long gone. Yeah, so what's the scale of the inflation we're talking about now? How many livres were in circulation? The French currency was in circulation. Right, right. So they've gone from about 8 billion to 20. So two and a half times in circulation over the course of less than a year. And in terms of how much depreciation there is, again, this is going to vary depending on how much local chaos there is. But it can be that the Asenia are accepted for only 5 % of their face value.

34:17So yeah, not quite kind of Weimar Germany levels of hyperinflation, but pretty extreme. But like any episode of hyperinflation, there are winners and losers. Who are the winners and who are the losers? The losers are people who are owed money, who get paid back in Asinia. And the winners are those who owed money. We're like, oh, there are all these Asinia in circulation and I owe you 10 ,000. Great. Here are 10 ,000 in Asinia. and the creditors say, no, no, no, I didn't want that 10 ,000. I wanted 10 ,000 or something else. But the ASIC map has flailed around in so many forms for so long now. Is this the final death spiral essentially for it?

35:01Well, what the then governing body eventually decides is, yes, The problem is that it's become untethered from the land. We're going to have a different paper called the Territorial Mandates, and they'll be much closer tied to the land. They're called Territorial. And so to show that we're not doing Asenia anymore, we're actually going to have a public destruction of all of the equipment, all of the typeface, all the plates. We'll have a big bonfire. you can see there's no danger of any more assignats ever being printed. So they have a literal bonfire of not just the notes themselves, but all the equipment used to make those notes.

35:48Yes, which, again, they could conceivably have used for something else. But yeah, it's the, how should we say, the optics of it that are important. That sounds like an incredible spectacle. So this was 1796, the big bonfire of the assignats, essentially. And then the territorial mandates go into circulation and they depreciate even faster than the Asanya did because everybody could sort of see where this is going. and we end up in a situation where wealthy people start writing contracts that say, like say for rent or to get a loan reimbursed, they say, and must be paid in gold or silver of a certain fineness regardless of any laws that are currently on the books or may be passed in the future.

36:41So they try to write contracts that are basically get out clauses for whatever monetary policy the government may ever have. So this is by 1796. We've had so many different variants of assignats and money and currency. The country's in just complete chaos and civil war and external war. The money that they've tried to issue at various points is just completely worthless. I mean, what is life like for ordinary people in France? I mean, it must have been incredibly traumatic, really, on so many levels. It was. It was really traumatizing. And people felt that if they had paper, they ought to buy something with it because they knew the paper wasn't going to be good.

37:30Obviously, for people on fixed incomes, for Laurentier, as one would say in the 18th century. Their situation is very precarious. The army is living off the land the way 18th century armies tend to do. So actually, the army is in a better position than because they're just ransacking and pillaging. Military suppliers become the new wealthy of this period. And yeah, everybody else, it's awful. And it's really terrible to think about because there was so much enthusiasm and excitement in 1790. Well, obviously, a decade later or a decade plus in 1804, Napoleon becomes France's leader. And I'm curious whether you think that the roots of his power, the reason why he was suddenly, France was able to go from a fairly sort of idealistic revolution, the constitutional monarchy to a republic, to suddenly being a dictatorship, whether that essentially grew out of all this economic chaos caused or stirred up by the assignats so in 1797 1798 the domestic picture is bleak the dimension domestic picture is chaotic they're trying to get a hold of it but it's just not working very well meanwhile everybody's getting reports from his embedded journalists that there's this young general traveling with an army through Italy, winning victory after victory after victory, setting up all of these sister republics all through the peninsula.

39:10And then rumor has it he's gone and done amazing things in Egypt. And so, yeah, this guy Napoleon Bonaparte, he really seems to know what he's doing. And his troops love him because he's quite a master at motivating people. And he actually gets invited to come back in 1799 and stage a little coup. And then in 1804, he crowns himself emperor. Wow. Okay. So these wars that they kind of stumbled into France as a almost by accident or distraction or was forced upon them, And that ends up elevating Napoleon Bonaparte from a military officer to a general to a plausible new leader of government to a new brand new emperor in just a few years.

40:04And that must make sense that after that kind of chaos and the trauma that we talked about, that you would want, you almost deeply need somebody like Napoleon to come forth and restore order. Some people felt that way. But other people recognized that, you know, this is just a new sort of police dictatorship. And, you know, how is this not a reign of terror? How is this not the worst sort of absolutism? Plus, you know, who is this guy? It's not like he's a member of a royal family. He's just an upstart from Corsica. So, you know, again, there was some division around this. but he was very very good at persuading people that he knew what he was doing he did have an eye for detail and he also had very strong feelings against paper money and insisted that France be put on a bi-metallic standard well to return to that that paper money error I mean after everything we've discussed now in last week's episode and this one.

41:14I'm curious what you think the story of the assignat and its many iterations really tell us about what money is and what role it played in the French Revolution. So I think the big takeaway picture is that money works best if you don't have to think about it very hard. And once you start thinking, hold on, wait a minute, what are all these numbers? You can kind of freak yourself out a little bit. But in sort of a position in a situation of political, social, cultural stability, you don't have to think about it. You just take it for granted. But when you do have to start thinking about it, then you realize that you're really depending on other people.

42:01And if other people don't want to accept your money, it doesn't matter what backs it. The Asignat, I'm curious, it's often seen as a core cause of this rampant money printing in both how the French Revolution got unmoored from its idealistic roots and why degenerated into Reign of Terror and eventually produced, for all his clear skills and genius, an absolute dictator. Do you think it was a worthy attempt fundamentally to develop the Asiknat? Was the idea at its core or at its inception a good one? At its inception, it was not an especially radical idea. The idea that land is the source of value, that certainly made sense in an overwhelmingly agricultural economy like France.

42:52There have been many attempts in the 18th century, the 19th century, into the early 20th century, to create banks or monetary instruments that are backed by land, backed by property. I mean, you could say in a way that that's sort of what any mortgage is. The real problem was that in seizing property formerly held by the Catholic Church, it creates this huge divide within French culture in much the same way that Henry VIII and seizing the English monasteries. So we just need to keep that context in mind and understand that it's not simply because the Asenia were paper, even though they were coincidentally printed on it, but the specific political context in which this action is taken that leads to their discrediting.

43:47It's the trust part that's absolutely essential, whether it's on paper, gold, plastic, whatever, it's the trust that is the glue that keeps currency together. And if that trust is somehow undermined for whatever reason, that's really what causes potentially economic carnage. Exactly, right? Because then everybody in every transaction is asking questions about, is this good? And just everything grinds to a hole. But to what extent do you think the assignats reflect at various stages the iterations of the French Revolution and the political chaos that deepens and deepens? And to what extent did it exacerbate or accelerate or worsen that political instability?

44:32I think there are a couple of ways to think about that. One is you can just look at the physical assignats and see how they change form from from depicting a king to depicting sort of Republican iconography to really not having very many pictures at all. We've just got to print as many of these as we can as quickly as we can. So that's a reflection. But I think it's more interesting or more important to think about the way that money operates as a sort of hinge between economic and political life. And this was a place where, again, the sort of political rhetoric of freedom and liberty of the first national assembly, when that rhetoric got applied to money and said, oh, sure, you're free to create your own smell change.

45:24Thank you very much for doing that. Now, it's in the name of political ideals, but it creates economic chaos. And then you've got economic chaos that makes people crave stronger political leadership. And so we've got a sort of feedback cycle. It's a loop. Competing money has often been a recipe for absolute chaos. But Rebecca, thanks so much for coming back on the show to talk to us about the Aspen Acts money at the time of the French Revolution. This has been absolutely fascinating. Thank you so much for having me. I've enjoyed the conversation. Well, that is sadly it for this week's episode of The Story of Money, though I could probably personally have done several more episodes on this.

46:11And don't forget, if you do like what you just heard, or even if you didn't, please leave us a review, a comment. I try to read them all. I'm Robin Wigglesworth, and we'll see you again next week.

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