When I wrote to you on the fifth Instant; of which Letter a Copy is enclos’d, I had not Time to notice a Subject about which different Ideas are entertain’d here. I mean the late Measures taken in France to establish their Finances.1 These may perhaps be announced in America not only as the Perfection of human Wisdom, but also as inevitably productive of the best Effects: in which Respect they would differ from those Perfections of Wisdom heretofore exhibited on that Theatre. Our Experience, in America, would have proved (had Proof been necessary) that the natural Effect of Paper Money is to consume all the personal Property of a Country. Not intending to write a Treatise on that Subject, I will not here go into the Reasons why, from the Nature of Money be the Form or Substance what it may, the circulating Medium is represented only by the moveable Property of a Country: excepting always the Case of actual Sales of Land; which Land does for that single Moment represent the precise Sum received. It follows however that in Proportion to the Encrease of that Medium, or the Decrease of Commodities which it represents, including in these the Debts for which it is a Tender, the Prices will rise or the Money loose of it’s Value. This is clear, supposing that Value to depend only in a small Degree on Opinion, but if it depend greatly or entirely on Opinion, Depreciation (inasmuch as it affects Opinion) becomes the Cause of ulterior Depreciation. The Assignats were going on in this natural Progression when, after the Revolution of the tenth of August,2 Measures of encreasing Cruelty were successively adopted to force Property out of the Hands of it’s owners; or at least to render the Possession of it highly dangerous. At the same Time the Total Suspension of foreign Commerce shut up all remaining Commodities within the Country; and the Permission to export was only granted in Exchange for Articles wanted by the Government. Thus the Value of the Paper was forced up by a Kind of qualified Robbery, on the Part of the Government, which gave it’s Paper for those Things which it oblig’d the Owner to sell, and which all but it’s Agents were prohibited from buying, by the very same Means which compelled the Sale. Mankind were pretty generally the Dupes of these Appearances, & altho they were going on to encrease the nominal Amount of their Paper to more than the Fee-simple of the whole Country was worth, People whose Habits and Profession should have taught them better, persisted in the absurd Idea that all that Mass of Paper would be paid according to it’s specified Value. When I left France,3 that System of Terror being for awhile suspended, I did not hesitate to declare that the Paper would rapidly fall: and, being prest by one of it’s Advocates to say how far and in what Period, gave it as my Opinion that it might in a Year be at a hundred for one. Strange as this Opinion then appeard, Experience has more than justified it.

This is a tedious Preface to what I meant to say, but it seem’d proper to shew, by Example, that the Ideas (even) of professional Men may be very erroneous upon this Subject, which our Experience has (I beleive) enabled us to consider more maturely than many others. You will have seen that one of the first Plans suggested in France was to issue, under a different Name, new Paper for the old. As this was not adopted, the Absurdity need not be detail’d. Another Plan, which does not appear to have been made public, was to call on Individuals of Property to give to the Government their negotiable Bonds; and then to obtain Supplies on the Credit of those Bonds: the Cash to be supplied (in the first Instance) at a great Discount by Societies of monied Men in Paris, and these to reimburse themselves, with Advantage, by Sale of Shares in such Operations to wealthy Foreigners. This Plan was impracticable, not meerly from the Doubt whether Foreigners would embark their Funds in such Speculations, but also from the Want of Capitalists in France to set the Machine in Motion. These had been destroyed pecuniarily by the Assignats & physically by the Guillotine. I come now to the Plan which was actually adopted.

This consists theoretically of three Parts. 1st to issue only 30.000.000.000 livres in Assignats. 2ly to fix their Relation to Specie at 100 which would reduce the Mass to 300,000.000. 3ly to exact by Force, and under the Name of a Loan, the Contribution of 600.000.000 (over & above all other Taxes) of which one half to be paid in Paper at 100 and the other Half in Specie. The Reasoning on this fine System is conclusive. The Paper Moiety of the Loan pays off all the Assignats. The Specie Moiety pays the Expences of the ensuing Campaign, which cannot but prove glorious to the Republic. And then she opens the year 1797 with a trivial Remnant of her antient Debt, much of which was prudently discharged by the Guillotine, and with a prodigious landed Property on which to issue new Assignats, and run again round the Circle which she will have (then) just compleated. This reminds me of a Sophism which some one attempted to palm on me when I was yet a Child. That if a Tortoise had the Start of a Fox, the Fox would never overtake him; because it was impossible, tho the Fox should go ten times faster than the Tortoise, but that this must go some Distance viz. a tenth of what the other should move over, and then while he was going that tenth the other would have advanced an hundredth and so on ad infinitum. My Answer was, let the Fox make a good Jump. Now those who have reasoned in the Manner before stated about french Finance never thought of the good Jump. Admitting, for Argument’s Sake, that it be possible to levy that enormous Assessmt; and it is utterly impossible, but by such Depreciation of the Paper as must render the Payment meerly nominal, the Sum of the Argument amounts to this; that France, now exhausted beyond any Thing of which modern Times can furnish an Example, should be able not only to defray the Expences of a vigorous War, and that too with a most prodigal Administration, but also to discharge a Debt of twelve Millions Sterling. This is at the first Blush, an Absurdity. As to paying the Debt, it is indeed very easy: for by nominally encreasing the Amount, it will (by the Force of Depreciation) discharge itself. The Assignats are already at about 200 and if extended to 40.000.000[.]000. they will be under 400 in which Case the Amount will be only 100 Millions, or four Millions Sterling: that is one third of what the System Makers calculated. But as to the Expences of the Campaign, that is a different Affair. Should they retire within their own Limits, and openly profess the Determination to make Peace, provided those Limits were secured to them, it is hard to say what might be the Extent of those Efforts which they might yet make. For, in this Case, we must take into Contemplation the national Pride, her characteristic Enthusiasm, and the Force of a Government the most absolute in it’s nature, and whose Members have every Thing to gain and to loose. As these Circumstances go out of the usual Course of financial Calculation, I will not dwell upon them. My Object was meerly to convey some Ground for the Opinion I entertain, that the newly adopted System of Finance is radically defective, inasmuch as it appears to my Mind self evident that no Force of Taxation can squeeze out from the People of France a Sum equal to the unavoidable Expenditures; so that, if their Enemies persist in the War, they must keep the Press agoing as long as any Thing can be done with it, and then resort to the convulsive Struggles of Despair. But I hear you say, will their Enemies persist in the War? I own to you that I am not able to answer that Question, decisively. I will not speak of the Views which I may suppose this Court to have; but all the World, except the Members of Parliament who are in the Opposition, see that Britain is gaining more by the present War than she ever did in any equal Space of Time during her History. Austria cannot but feel that the Contest wears her down, for the Sake of recovering the low Countries which, from their remote Situation, must ever be an onerous and precarious Possession. Should France therefore cede her Conquests, I cannot see why the Emperor should not immediately quit the Game, and proceed to those Exchanges and Arrangements which will suit his Views. It is true that his Engagements with this Country and with Russia might stand in the Way; but after making certain Propositions to the former, he might hold himself excused by their NonAcceptance, and the Empress (by the bye there is a Report of her Death)4 would rather have the Aid of her imperial Ally to secure the Spoils of Poland against any Attempts which might be made by Prussia and Turkey, than furnish a Body of her Troops to be employed on the Rhine. Will the Desire of reestablishing the House of Bourbon in France have any material Operation? On this Subject I will write to you at my first Leizure. This is enough I fear to tire your Patience, so I bid you Adieu. I am ever & truly yours