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Wednesday, June 9, 2010

Out of the Depths, Part VIII: The Man of Destiny

As general, then First Consul for Life and, finally, Emperor, Napoleon Bonaparte accomplished amazing things. He restored order to society, codified the laws of France, sponsored scientific research and brought back an economy left in shambles by the Revolution. The best example of this is his complete reform of the monetary system in 1803 — L'An 11 of the Revolution — putting the currency on a sound basis for the first time since 1790.

Money as a Weapon

Naturally, being Napoleon, reform of the currency was not done for civic or altruistic reasons. Everything the Man of Destiny did was geared toward furthering his aim of extending the Empire. Just as Alexander the Great realized that he needed a secure base of supply and adequate financial backing before conquering the world, Napoleon knew that he could do nothing with France in the financial condition it had been left by the forces of Revolution.

Money as well as a sound society and technological advances were only additional weapons of war to the Corsican. For example, he had offered an enormous prize to anyone who could come up with a new way to preserve food — for the army, of course. "An army travels on its stomach" is a well-known Napoleonic aphorism. That was how "canning" was developed. Both the name of the container and the verb, "can," are short for "canister," a type of ammunition, from the food container's resemblance to the cannon load.

More than most political figures, Napoleon's career is shown on his coinage. We can trace his rise from one of three Consuls (1799-1802), to "First Consul for Life" (1802-1804), to Emperor of the French Res Publica (1804-1806), and then to the pinnacle of his career as Chief of State of the Empire (1806-1814). Finally, we see his triumphant if brief return during the "Hundred Days" in 1815. Every step of the way we see conscious parallels with ancient Rome, down to the attempt to make Paris a worthy fifth successor to the Eternal City through his monumental building program. In his anxiety to establish the French Res Publica as the only legitimate restoration of the old empire, Napoleon even formally abolished the Holy Roman Empire founded by Charlemagne.

Charlemagne had taken the regnum — the rule — of the west from Byzantium by restoring a specifically western empire. Now Napoleon proposed to shift the regnum of Europe from the Germans back to the Franks, whom he considered the legitimate heirs of Charlemagne and, through him, the imperium of Rome, now to be attached to the French Res Publica. The only thing Napoleon succeeded in doing, however, was to destroy the last formal remnants of the concept of a socially and culturally integrated Europe, albeit divided politically in local matters, and ensure the dominance of the Nation State idea for political sovereignty.

This alienated each political division from all the others, creating the belief that individual survival depended on the maintenance of an impersonal and absolute sovereignty for whatever current political arrangement under which an individual lived. The medieval idea of the sovereignty of the individual was overthrown in favor of the idea of absolute State sovereignty. Lost was the ancient pagan and medieval Christian idea that people give a grant of power to the State in order to allow the State to carry out its function and so that people can live with each other in accordance with their nature.

Humanity's basic nature was now considered anarchical rather than social. This was through the influence of Voltaire, Rousseau, and various thinkers of the Enlightenment. The State was viewed as an enemy rather than a tool. Under the "State is a Tool" concept, the specific form doesn't matter, as long as the substance remains: protection and security for individual rights and the sovereignty of the human person. Under the "State is an Enemy" orientation, the substance is gone and the form is all that matters, which, paradoxically, transforms into the notion that the State is your only friend and must hold all power.

These ideas, although not explicitly stated, drove Napoleon's domestic and foreign monetary and fiscal policy. The restoration of the French regnum through the creation of the Res Publica and the transfer to it of the Roman imperium absolutely required a sound currency. This was both to secure the base of operations on a firm financial footing, and to finance the extension of the imperium to all parts of Europe, and then to Asia and North Africa as the Empire was completely restored.

Bonaparte's Advance

The only consistent coinage program of the Revolution had been to ensure that a crown-sized silver coin was minted regularly. Under the old monetary system, the Ecu of Six Livres had been the workhorse of the economy. The new Five Francs took over this role after the monetary reform. As William Jennings Bryan was to demonstrate in his populist "Free Silver" campaign in the United States in the 1890s, a large silver coin had an important symbolic value and role in demonstrating the presumed soundness of the currency and the continuance of normal economic life. In view of the ubiquitous assignats and the hideous inflation they caused, however, it is doubtful that anyone was fooled.

The Five Francs, however, was minted with regularity from L'An 4 through L'An 11 with the "Hercules" obverse, replacing the Ecu with "Genius Writing in the Book of the Law" obverse, which had been struck until L'An 2. This specifically Republican issue was replaced in L'An 11 (approximately 1803) with a coin bearing the effigy of Napoleon as First Consul. Bonaparte had seized power in 1799, but had been too busy with a multitude of other projects (such as securing his position) to get around to the critically needed monetary reform.

When he did get around to it, Napoleon, like his Republican predecessors, ignored small change. Although a completely new coinage was instituted in 1803, the lowest denomination was the silver Quart — One-Fourth of a Franc — and it was a full year after the new coinage began that this was struck in 1804.

This inaugural coinage of Napoleon as Consul for Life consisted in the initial year of the Demi-Franc (1/2), the Franc, the symbolically and economically important Five Francs, and the first gold coinage in France in ten years. This consisted of the coin that was to bear the name of "Napoleon," the 20 Francs, as well as a 40 Francs.

In 1804 the Quart was added, as noted above, and also a Two Franc piece. All coins were to the metric standard, established early in the Revolution but which the authorities had never quite gotten around to implementing in full. The Franc-based currency was strictly "scientific." The basic coin was the Five Franc piece, weighing exactly 25 grams, and containing precisely 22-1/2 grams of pure silver (.7234 of an unscientific Troy ounce). The original fineness was .900. The Franc was divided into a scientific 100 "Centimes" or "Hundredths."

All coins were to conform absolutely to these standards. The Quart, therefore, weighed exactly 1.250 grams and contained exactly 1.125 grams of silver. The Demi, of course, was 2.500 grams total weight with 2.250 grams of silver, while the Franc and the Two Francs weighed 5.000 and 10.000 grams, with 4.500 and 9.000 grams of silver, respectively.

The desire for a strictly scientific currency broke down, however, when gold was included. Due to the necessity of acknowledging the laws of supply and demand and their effect on a bimetallic system, the 20 Francs contained .1867 of a Troy ounce of pure gold, while the 40 Francs weighed in at .3734 ounces. The effect was the establishment of a silver currency subsidiary to gold, although it remained officially bimetallic, and the predominant currency for domestic commerce was, indeed, the silver Five Francs.

All coins bear a portrait of Napoleon facing right, surrounded with the legend, BONAPARTE PREMIER CONSUL. The reverses are all nearly identical, showing the denomination inside a wreath surrounded by REPUBLIQUE FRANÇAISE and the date according to the Revolutionary calendar. This issue was minted for only two years, L'An 11 and L'An 12, or approximately 1803 and 1804 of the abolished Christian calendar.

This "First Consul" coinage lasted barely two years. It was replaced with an explicitly imperial coinage for the Republic when Napoleon proclaimed himself Emperor. The coins in this series constitute a full coinage of all the denominations from the previous issue, but still do not include any minor coins under a Quarter Franc in value. The essential change was the transformation of Bonaparte from "First Consul" to "Emperor," the legend now reading NAPOLEON EMPEREUR. The reverse was left unchanged, and dates continued to be given in the Revolutionary calendar. This issue was minted from L'An 12 through L'An 14, 1804 to 1806.

Another issue was introduced in 1806. The major change was a switch from dates in the Revolutionary calendar back to the Christian calendar. This was possibly an attempt to garner the favor of the papacy and the still predominantly Catholic population. This issue, too, lasted barely two years before the decision was again made to redesign.

There was an apparently too-hasty adoption of a new effigy of Napoleon in 1807 and employed on the Quart, Demi, One, and Two Francs. This was the so-called "Negro Head" image, which was rapidly withdrawn.

This misadventure in portraiture was replaced in the latter part of 1807 with a "Laureate Head" of Napoleon, meaning that the effigy now bore a laurel wreath in the style of the ancient Roman emperors. The other innovation was to strike, for the first and last time until the mid-century imperial coinage of Napoleon III (who in this one instance was able to surpass his uncle), minor coinage of less than a Quarter Franc in value. This consisted of a copper Five Centimes and a billon 10 Centimes, which probably served to replace both the earlier Republican issues of the same denominations, and the old regal Sous and Two Sous. Due to the critical need for small change, these had remained in circulation long after their official demonetization. The Five Centimes was struck only in 1808. The designs for both are similar: a crowned "N" on the obverse surrounded with a wreath, with the denomination, date and legend, NAPOLEON EMPEREUR, on the reverse.

The Laureate Head issue was struck through 1808. It was replaced in 1809 with a final Napoleonic issue. The change was to replace REPUBLIQUE FRANÇAISE with EMPIRE FRANÇAISE. As this issue was struck from 1809 through 1814, these are the most common Napoleonic coins. They are consequently very reasonably priced, running about half the prices of common dates in the prior issues, except for the gold Napoleon, which usually responds directly to changes in the price of bullion. This issue was briefly continued in 1815 after Napoleon's return from Elba during "The Hundred Days," but limited in scope to the Two, Five and 20 Francs.

"I Care Not Who Makes the Laws"

In contrast to the over-abundance of paper money during the Revolution, domestic issues during Napoleon's tenure were extremely limited. They were restricted to the higher denominations and may have been intended solely for financial transactions for which gold and silver would have been too cumbersome.

As we noted previously, after the debacle with the assignats, the business community in France established three banks. These were the Caisse des Comptes Courants for bankers, the Caisse d' Escompte du Commerce for businessmen, and the Comptoir Commercial for retailers. Soon after the Eighteenth Brumaire (November 9, 1799) and the coup d'état in which Napoleon seized power, Napoleon consolidated the private banks and put them under the control of the State. (Conant, op. cit., 44-45.)

This policy is in sharp contrast to the way in which Napoleon used currency to destroy the economies of his enemies. Rothschild is alleged to have said to the Emperor, "Give me control over money and credit, and I care not who makes the laws." (Frederick Merton, The Rothschilds, A Family Portrait, New York: Atheneum, 1962.) Whether or not Rothschild actually did say this, the fact of the matter is that Napoleon both made the laws and maintained strict control over money and credit. He also understood how to use these uniquely social goods to the discomfiture of any who opposed him.

Napoleon's monetary and fiscal policy is generally treated one of three ways by many historians and analysts. The first way, except to note that he did, indeed, reform the currency, is to ignore the whole thing. The second is to declare that, since he was financed in part by the House of Rothschild, he was a "tool" of "International Bankers" (the current euphemism which the cognoscenti instantly recognize as meaning "The Jews") who were bent on world conquest and were using Napoleon as a dupe to advance their plans. The third way is to assert that, since he was the Man of Destiny and Savior of Europe, he was fighting an England and Europe in thrall to and controlled by "International Bankers" arrayed in a centuries-old conspiracy to enslave the human race.

Studying Napoleon's coinage and monetary policy, however, we realize that the Emperor was not enslaved to anyone, nor was he the type to be duped. The Man of Destiny looked on money and credit as very useful and very effective weapons of war. There was no question of Napoleon either manipulating or being manipulated by "The Conspiracy," or of treating coin and currency as incidental to his main program. Nowhere is this illustrated more graphically than in the steps he took to destroy the Austrian currency.

A Financial Fifth Column

Where the French had generally misused the mechanism of paper money, the Austrians made a more careful use of it than was usual at the time to reinforce the soundness of the economy. While this resulted in a measure of inflation, almost inevitable in a traditionally structured economy based primarily on metallic currency, it also gave them the ability to wage effective war against the Corsican upstart. Accurately pinpointing the source of his troubles, Napoleon set out to destroy the Austrian economy and thus the Eastern Empire's ability to resist him. In a letter to Champagny, a government minister, on September 6, 1809, Napoleon outlined his program of economic subversion, perhaps inspired by the counterfeiting operation carried out by the British against the colonists during the American Revolution.
Maret [Joachim Murat, husband to Napoleon's sister Caroline, who had been installed as "King of Naples" after the ouster of Ferdinando IV] will send you a collection of all the different kinds of [Austrian] bank-notes. Enclosed you will find an order on the subject. I desire you will manufacture these notes, of every amount, until you have reached 100,000,000. You must set up machinery which will turn out 10,000,000 a month. It was paper currency which enabled Austria to make war against me and with paper money she may be able to do it again.

That being so, it is my policy, both in peace and war, to destroy that paper currency and to force Austria to come back to the metallic currency which, by its very nature, will force her to reduce her army and all that wild expenditure on her part which has threatened the safety of my dominions. It is my intention that this operation shall be carried out secretly and mysteriously. Yet the object I set before me is far more a political one, than any advantageous speculation or gain. The subject is exceedingly important. There is no hope of peace in Europe so long as the House of Austria can obtain advances of 300,000,000 francs or 400,000,000 francs on the credit of its paper money.

Send a shrewd, intelligent agent who will come while we are here and collect all the information necessary to give this affair the scope I desire it to have and which will cause it to have so great an influence. (J. M. Thompson, ed., Napoleon's Letters. London: Prion, 1998, 214-215.)
Austria had employed paper currency for some time, but it was not until the wars with France as a result of the Revolution and Napoleon's subsequent career of conquest that issues became common — and inflationary, as they were backed by state debt instead of financially feasible projects. Notes were denominated as Five, 10, 25, 50, 100, 500 and 1,000 Gulden (Florins). The notes carry the promise that they are payable at the Vienna State Bank, and carry the denomination written out and in numerals. They also bear the usual promises and certifications of paper money.

Napoleon's forgeries copied the originals closely, although they were, for some reason, often printed on blue paper instead of the more common white. The counterfeits are so common that they are valued about the same as authentic notes, giving additional evidence of the enormous quantities needed to finance the wars and counterfeited by Napoleon as a weapon of war.

The authentic notes Napoleon chose to counterfeit in 1809 were issued under a decree of January 1, 1800, even though there was a later issue under a decree of June 1, 1806. These later notes are somewhat more elaborate than the earlier issue, which may account for the fact that the simpler notes were chosen to falsify. On the other hand, a far more clever motive might be that the older notes might not be subject to the same close scrutiny as a newer note, and any discrepancies might be written off with a shrug as belonging to an "obsolete" note issue.

Of course, the whole discussion may be moot: perhaps the French agents had simply forwarded the first complete and consistent set of currency they managed to collect out of circulation, which happened to consist of older notes. The newer 100 and 500 Gulden notes, for example, have a substantially different "look" than the smaller denomination notes in addition to being oriented horizontally instead of vertically. The newer series also did not include a 1,000 Gulden note and, when counterfeiting, the tendency is to get more bang for the bogus buck.

Possibly due to the prevalence of counterfeits, another series was issued under a decree of March 1, 1811, the year of the national bankruptcy, all in notes of 100 Gulden or less. These were not banknotes drawn on the Vienna State Bank, but demand notes issued by Die Privilegirte Vereinigte Einlösungs und Tilgungs Deputation. Barely two years later, under a decree of April 14, 1813, a series of "Anticipation" notes was issued, that is, the government borrowed money from the public in anticipation of tax collections. These were issued in denominations of Two, Five, 10 and 20 Gulden. Clearly Napoleon had succeeded in disrupting the Austrian economy to a significant degree.

Austrian Aftereffects

Austria's economy was to suffer the effects of Napoleon's financial warfare for decades. One of the most onerous tasks faced by Prince Metternich and his great rival, Count Anton Kolowrat-Liebsteinsky, was to restore Austria's good name in monetary and fiscal matters. The biggest bone of contention between the two was the Count's attempts to reduce military expenditures in opposition to Metternich's "forest of bayonets" policy.

Austria declared bankruptcy in 1811. This no doubt warmed the cockles of Napoleon's heart, giving concrete evidence of the success of his strategy. The full effects of his efforts were, ironically, being felt at the same time he married the Austrian Archduchess Marie Louise, cementing an alliance of sorts with the Habsburgs — the "House of Austria." Even after bankruptcy, however, further enormous debts were run up from 1813 and 1815, further crippling the ability of the government to make good on its promises.

From 1815 to 1848, the annual interest on the State debt amounted to nearly a third of total revenues, and the army's budget to another quarter of national revenues. Even so, Austrian military capability chronically lagged behind the rest of Europe. This ensured the rise of Prussia to the leadership of the German states and the formation of the Second Reich.

The ultimate fruit of Napoleon's success was the rise of the chauvinistic Nation State as the predominate political arrangement, the ruin of the later Napoleon and France herself in the Franco-Prussian War, and thus World War I. This led directly into World War II and the totalitarian conquest of much of Europe and Asia. Napoleon did indeed redraw the map of Europe, but not in any way he intended, nor with ordinary weapons of war. His most effective weapon, ultimately, was to manipulate money and credit, and thus the economy, of the pivotal country in Europe, rendering it helpless against the rise of a new Europe which had no place for the old values.