The Enlightenment and Political Economy

Liberal common sense under the Revolution

The Origins of Laissez-Faire Economics

Liberal common sense under the Revolution

Dupont de Nemours was the youngest disciple of François Quesnay, who once said of him: "We must take care of this young man, for he will speak when we are dead". When the French Revolution began, nearly all the great Physiocrats, including the Marquis de Mirabeau, were already gone; Mirabeau himself had passed away on July 13, 1789. Dupont de Nemours wrote the list of grievances for the bailiwick of Nemours.

This fascinating document contained all the complaints from liberal economists against trade restrictions, monopolies, and attacks on property. Dupont de Nemours was also elected to the National Assembly.

During the Revolution, he became the voice of liberal common sense, standing firm against the growing tide of populism and interventionist demagoguery, which ultimately prevailed.

As early as November 1789, when there was talk of granting a monopoly to the Caisse d'Escompte (which could turn it into a public bank—the Bank of France), Dupont de Nemours spoke out in defense of competition.

"It would be better", he says, "to leave the banking business to the laws of free trade". And he adds:

"I do not understand what the minister meant when he spoke of granting a privilege to the Caisse d'Escompte. If this privilege includes exclusivity, you must reject it, for you have come here to destroy exclusive privileges, not to create new ones."

Despite his warnings, the Assembly ignored his objections and took another step toward establishing a central bank and a banking monopoly. In 1790, at the Constituent Assembly, Dupont de Nemours followed the pacifist tradition of his Physiocrat friends and proposed a law forbidding offensive wars. The first article read: "The French Nation shall not permit itself to engage in any offensive war to seize the territory of others or to infringe upon the rights or liberty of any Nation".

This proposal was rejected.

That same year, 1790, debates began about issuing new paper currency to cover government expenses. Dupont de Nemours firmly opposed this and published a pamphlet titled Effects of Assignats on the Price of Bread. The title was accurate, as he explained that issuing assignats would inevitably lead to inflation, an increase in the prices of commodities, including bread.

He signed the pamphlet as "a friend of the people". The piece caused quite a stir, as the Assembly was asked who had written it. Dupont de Nemours then stood up and admitted it was his work, saying he was not ashamed to use the title "friend of the people" because fighting against the assignats was truly serving the people. Once again, his advice was ignored, and the assignats were issued.

We all know the disaster that followed, the economic ruin and suffering endured by the people, many of whom lost everything when the assignats became worthless and had to be burned. A few years later, the Assembly turned its attention to the idea of creating an actual Bank of France, one that would be granted a monopoly over the production of money.

Dupont de Nemours, still firmly opposed to the idea of a public bank, seeing it as nothing more than a monopoly, reminded the Assembly of the assignats' disastrous experience. He told them:

"Do not prepare yourselves for regrets like those that tormented my colleagues in the Constituent Assembly. At the time, my proposal to limit assignats only to the payment for national goods and not to make them a circulating currency was rejected. Today, they say: 'Ah, if only we had listened to Dupont de Nemours!'"

But once again, no one listened to him.

Quiz

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What reason does Dupont de Nemours give for postponing the creation of Assignats?