Tribune. The current debate on the question of the monetary financing of the public debt returns to various past experiences, in particular that of the assignats issued in 1789 and became money in 1791. The current doxa wants this issue to have been disastrous while until the middle of the XIXe century, a large number of Republicans continued to support the experiment of the assignats and passed a less critical judgment.
Moreover in 1919, in Paper money in the French Revolution, a Russian economist Semion Anissimovich Fal’kner (1890-1938) supported the issuance of assignats:
– From a political point of view: without them, the French Revolution would not have been able to resist the coalition of European monarchies and finance the war effort.
– From a monetary point of view: an unbridled monetary issue in a period of major crisis does not automatically lead to a crash.
– From a social and economic point of view: monetary issuance does not inevitably lead to a collapse of production and general impoverishment.
An original theory
Semion Anissimovich Fal’kner began his study in 1916, when the Tsarist government chose to finance the war effort by issuing money. It was published in the midst of revolutionary turmoil, while civil war and hyperinflation were in full swing. The work has never been translated, except very partially in German. A translation into French (Classique Garnier, 536 pages, 49 euros, January 2021), finally comes to fill this absence.
Fal’kner has compiled a synthesis of the historical research of his time on assignats, as well as an original theory of what he calls an emission economy. For him, the monetary financing of public deficits, in a period of acute crisis, impacts the real economy and the distribution of wealth between social groups, creating a system sui generis, which operates according to its own socio-economic laws.
The Ancien Régime had left a very heavy public debt, and the capacity to borrow of the new revolutionary power was almost non-existent, the taxes returning very badly. In a situation of extreme crisis, the revolutionary bourgeois did not hesitate to operate a radical redistribution of wealth by nationalizing the property of the Church, thus consolidating their own claims on the State.
Fundamentally, Fal’kner views the issuance of paper money as the most powerful form of taxation available to weakened states. Everyone will seek, by getting rid of their tickets as quickly as possible, to transfer the weight of this tax to someone else. Finally, the emission tax weighs on the poorest.
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