Assignat

Assignats were paper money (fiat currency) authorized by the Constituent Assembly in France from 1789 to 1796, during the French Revolution, to address imminent bankruptcy.

[4][5] On 21 December 1789 a first decree was voted through, ordering the issue (in April 1790) of 400,000 livres' worth of assignats, certificates of indebtedness, with an interest rate of 5%, secured and repayable based on the auctioning of the "Biens nationaux".

Constitutional monarchists such as Jean-Sifrein Maury, Jacques Antoine Marie de Cazalès, Nicolas Bergasse and Jean-Jacques Duval d'Eprémesnil opposed it.

[7] 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.

Étienne Clavière lobbied for large issues of assignats representing national wealth and operating as legal tender.

[13] Jacques Necker himself argued at the National Assembly on 27 August that the assignats were a paper money which would bankrupt France.

Camus stressed what he believed was the lesson of American experience of paper, which had undermined metal money and sent prices spiralling.

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.

Necker, suspected of reactionary tendencies, resolutely against the transformation of the assignat into paper currency, handed in his resignation on 3 September.

[25] The properties backing the assignats were renamed biens nationaux ("national goods") and auctioned by district-level authorities.

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.

Already in fall 1790, the National Assembly itself was paying a 7.5% commission to exchange large denomination assignats for smaller coins.

[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.

Stephen D. Dillaye, an American politician who referred to monetary policy history, 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.

In August, 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.