Whenever a great quantity of paper money is suddenly issued we
invariably see a rapid increase of trade. The great quantity of the
circulating medium sets in motion all the energies of commerce and
manufactures; capital for investment is more easily found than usual
and trade perpetually receives fresh nutriment. If this paper
represents real credit, founded upon order and legal security, from
which it can derive a firm and lasting value, such a movement may be
the starting point of a great and widely-extended prosperity, as, for
instance, a splendid improvement in English agriculture was
undoubtedly owing to the emancipation of the country bankers. If on
the contrary, the new paper is of precarious value, as was clearly
seen to be the case with the French _assignats_ as early as February,
1791, it can confer no lasting benefits. For the moment, perhaps,
business receives an impulse, all the more violent because every one
endeavors to invest his doubtful paper in buildings, machines and
goods, which, under all circumstances, retain some intrinsic value.
Such a movement was witnessed in France in 1791, and from every
quarter there came satisfactory reports of the activity of
manufactures."

"But, for the moment, the French manufacturers derived great advantage
from this state of things. As their products could be so cheaply paid
for, orders poured in from foreign countries to such a degree that it
was often difficult for the manufacturers to satisfy their customers.
It is easy to see that prosperity of this kind must very soon find its
limit. . . . When a further fall in the _assignats_ took place this
prosperity would necessarily collapse, and be succeeded by a crisis
all the more destructive the more deeply men had engaged in
speculation under the influence of the first favorable prospects."[31]