2.2 | An economy in crisis: price controls and paper money

One legacy of the Old Regime was France’s dire economic situation: distribution channels were utterly disorganised and food shortages loomed.  

To restore the country’s finances, a vast financial system was created in 1790. It was based on the issue of assignats, a form of paper money devised to cover expenditure by anticipating the sale of national property (confiscated from the clergy or emigrants). But this new currency led to a sharp rise in prices. To remedy this, the National Convention introduced the Law of the General Maximum, which targeted both prices and wages. At the same time, a war economy was established, based on providing support for an army that now numbered over 700,000 men.