I read several papers this weekend in preparation for my own paper on Frederic Bastiat. One of them was Joseph Salerno’s, “The Neglect of the French Liberal School in Anglo-American Economics: A Critique of Received Explanations“. In it I came across a name (actually several) I’ve never heard of before, Destutt de Tracy, a Frenchman. Here are a couple of quotes from his A Treatise on Political Economy, translated by Thomas Jefferson in 1817. You can’t say we weren’t warned.
In a word when your paper [money] is good, it is useless to oblige people to receive it; when bad, it is iniquitous and absurd to force it to be received as good. No solid answer can ever be given to this dilemma. Mirabeau had therefore great reason to utter the celebrated phrase, which he too much forgot afterwards : All paper money is a phrensy [sic – frenzy] of despotism run mad. [Emphasis added]
and this on paper money and banking…
…society finds itself in the full state of paper money, of which we have seen the consequences. It is thus that the *caisse d’escompte produced the assignats in France. It is thus that the bank of London has brought England to the same state in which it is at this moment. It is thus all privileged companies [banks] end : they are radically vicious ; and every thing essentially bad always terminates badly, notwithstanding its transient successes ; [Emphasis added]