Assignats

The French government had for many years been labouring under a massive deficit.  With the outbreak of revolution the new Constituent Assembly had to deal with the crippling debt.  They believed they had found an opportunity to erase some of the debt by selling off church lands.  The assignat was introduced as a form of bond set against the value of the church land.  By April 1790 they had become legal tender.

Due to assignats only being issued in large denominations they had little practical day to day use.  This caused more issues as ancien regime coins still remained in circulation and there was no official exchange rate.  There were further problems as it was easy to forge on a large scale assignats. The assignat quickly depreciated in value over the course of the revolution.

In February 1797 the Directory abolished paper money and returned to coin.

Germaine De Staël  on the adoption of assignats.  Taken from Considerations on the Principle events of the French Revolution, Germaine De Staël, Liberty Fund, Indianapolis  (2008) p255-256

The members of the Finance Committee proposed to the Constituent Assembly to discharge the public debt by creating nearly ninety million sterling of paper money, to be secured to church lands, and to be of compulsory circulation.  This was a very simple method of bringing the finances in order; but the probability was that in thus getting rid of the difficulties which the administration of a great country always presents, an immense capital would be expanded in a few years, and the seeds of new revolutions to be sown by the disposal of that capital.  In fact, without such vast pecuniary resources, neither the interior troubles of France nor the foreign war could have so easily taken place.  Several of the deputies who urged the new Constituent Assembly to make this enormous emission of paper money were certainly unconscious of its disastrous effects; but they were fond of the power which the command of such a treasure was about to give them.

M. Necker made a strong opposition to the assignat system; first, because, as we have already mentioned, he did not approve of the confiscation of all the church lands and would always, in accordances with his principles, have excepted from it the archbishoprics, bishoprics, and above all the smaller benefices for the curates have never been sufficiently paid in France, although, of all the classes of priests, they are the more useful.  The effects of paper money, its progressive depreciation, and the unprincipled speculations to which that depreciation gave rise were explained in M. Necker’s report, with an energy too fully confirmed by the event.  Lotteries, to which several members of the Constituent Assembly and in particular the Bishop of Autun (Talleyrand) very properly declared themselves adverse, are a mere game of chance; while the profit resulting from the perpetual fluctuation of paper money is founded almost entirely on the art of deceiving, at every moment of the day, in regard to the value either of the currency or of the articles purchased with it.  The lower class, thus transformed into gamblers, acquire by the facility of irregular gains a distaste for steady labour; finally the debtors who discharge themselves in an unfair manner are no longer people of strict probity in any other transaction.  M. Necker foretold, all that has since happened in regard to the assignats- the deterioration of public wealth by the low rate at which the national lands would be sold, and that a series of sudden fortunes and sudden failures which necessarily perverts the character of those who gain as of those who lose; for so great a latitude of fear and hope produces agitations too violent for human nature.