All Commentary
Thursday, February 1, 1973

Edmund Burke on Inflation and Despotism

Edmund Burke is generally regarded as one of the founders of modern conservative thought. As a defender of tradition, private property, slow social change, and “muddling through,” he was an opponent of aprioristic thinking, rationalistic blueprints for social reconstruction, and “metaphysical arithmeticians.” He is therefore not heralded as a master of the subtle skills of economic reasoning. Nevertheless, Burke’s teachings on the relationship between policies of monetary debasement and social change indicate that he was far more alert to the dangers of monetary inflation than are recent defenders of Federal deficits and a system of price-wage controls. When Nation’s Business can survey 450 leading business executives concerning their opinions on price and wage controls, and find that over 70 per cent of them favor the controls, with 47 per cent of them favoring an indefinite extension of such controls, it is not difficult to conclude that Edmund Burke had a more sophisticated sense of economics than cur modern professionals.[1]

In 1790, Burke distinguished himself by writing what was to become the classic statement of conservative social theory, Reflections on the Revolution in France. Though its focus is social and political, the book contains several penetrating sections dealing with two crucial economic issues: wealth redistribution and monetary debasement. His presuppositions are not those of classical liberalism, given his commitment to landed property as distinguished from commercial (“monied”) property, but his conclusions are quite close to nineteenth-century liberal monetary theories.

Burke’s defense of private property in land as a form of ownership superior to stocks, bonds, and other “paper” investments harkens back to the famous Putney Debates of Cromwell’s Army in 1647. Burke, like Ireton (Cromwell’s son-in-law) before him, viewed the owners of landed property as men with a greater stake in the preservation of society than either the property less or those owning non-landed property.[2] Understandably, given this perspective, Burke was appalled by the advent of money speculators in France, coupled with the simultaneous confiscation of church and Crown lands. “The monied interest is in its nature more ready for any adventure,” he wrote, “and its possessors more disposed to new enterprises of any kind. Being of a recent acquisition, it falls in more naturally with any novelties. It is therefore the kind of wealth which will be resorted to by all who wish for change.”[3] Burke was not opposed to change as such; he wrote that any state “without the means of some change is without the means of its conservation.”[4] But he wanted slow, steady, familiar, “organic “changes, and not the more rapid changes associated with modern industrial society. In this sense, he was certainly a “conservative” rather than a “liberal.”

This preference for landed property — which in eighteenth-century England meant property hedged about by statist restrictions on ownership, transfer of such ownership, inheritance, and politically imposed land enclosures[5] — over monied property undoubtedly colored Burke’s economic analysis. He resented what he regarded as land confiscation in France and the sale of this land to middle-class French businessmen, thereby “carrying on a process of continual transmutation of paper into land, and land into paper…. By this means the spirit of money-jobbing and speculation goes into the mass of land itself and incorporates with it.”[6] Yet he accepted Parliamentary enclosure bills, and he was personally interested in agricultural rationalization and improvement for England’s increasingly market-oriented system of farming. Indeed, as Prof. Herbert Heaton has written, “Burke discussed cabbages and pigs almost as earnestly as he did the grievances of the American colonies.”[7] Thus, he was not fully consistent in his support of private ownership nor in his attacks on political confiscation.

Immorality and Instability

His real concern was with morality and with semi feudal concepts like honor and loyalty. These concepts were being undermined in France by revolutionary politics and monetary debasement on the part of the French government. Instability — Burke’s greatest fear — was becoming the order of the day in France. Most serious, this instability was undermining the French family, that most fundamental of all institutions in conservative social analysis.

Nothing stable in the modes of holding property or exercising function could form a solid ground on which any parent could speculate in the education of his offspring or in a choice for their future establishment in the world. No principles would be early worked into the habits…. Who would insure a tender and delicate sense of honor to beat almost with the first pulses of the heart when no man could know what would be the test of honor in a nation continually varying the standard of its coin?[8]

The result of such an unsettled commonwealth, Burke predicted, would be barbarism. What was to take place in France over the decade following the publication of the Reflections convinced many of his contemporaries of the accuracy of his prediction.

France, it should not be forgotten, was probably the wealthiest nation on earth in the final quarter of the eighteenth century, although the English were rapidly overtaking their French neighbors, and by 1800 had probably succeeded in becoming the world’s richest citizens. Burke understood the position of the French better than the French revolutionaries did; he praised France’s cities, the transportation system, French agriculture, manufacturing, charitable foundations, and scholars.`’ But the French state was also in debt — so heavily in debt that half of all the King’s revenues went in interest payments on the debt. (England was in a similar situation, and Burke may have been hinting at this fact in the Reflections.[10])

Nations are wading deeper and deeper into an ocean of boundless debt. Public debts, which at first were a security to governments by interesting many in the public tranquility [a variation of an argument used by Alexander Hamilton in 1790 in his Report on Public Credit[11] are likely in their excess to become the means of their subversion. If governments provide for these debts by heavy impositions, they perish by becoming odious to the people.[12]

Burke, like Hamilton, failed to see that a “little” governmental indebtedness is comparable to a little unwanted pregnancy, but he did grasp the politically unsettling reality of heavy state debt. Such conditions lead to revolution. (The French Estates General were summoned in order to approve tax increases necessary to finance the French debt; this was the first great event in the French Revolution.) Burke feared this repercussion of state debt because, he said, revolutions “are favorable to confiscation; and it is impossible to know under what obnoxious names the next confiscations will be authorized.”[13]

Monetization of Debt

Like so many politicians before and since, the French revolutionaries decided that the best possible way of getting out of debt was to go deeper into debt. The Anglo-American version of this system is through the monetization of debt, through the mechanism of a central bank and fractional reserve commercial banks.[14] The French leaders adopted a somewhat different system. They first confiscated the lands of the church and Crown. Then they issued paper debt certificates, called assignats, that could be used in the purchase of these lands. These certificates bore 5 per cent interest at first, lowered to 3 per cent a few months after the initial offering in 1789. The decree of April 17, 1790, made these legal tender. These were “given” to — forced upon — those holding other forms of state debt certificates.[15] In the words of Prof. Bosher, who is not hostile to these administrative reforms, “Any of the alternative methods put forward would have perpetuated the old private enterprise system.”[16]

The value of these fiat notes fell almost immediately. The “temporary” expedient of inflation and legal tender laws became a permanent phenomenon. The 400 million of them issued in 1789 became a roaring flood of 40 billion within four years. Again, quoting Bosher: “A decree of 8 April 1793 ordered all government purchases and payments to soldiers to be in assignats. Three days later, the Convention prohibited circulation, sale or purchase of gold and silver coin. All transactions were henceforth to be in assignats, now the principal legal currency.”[17] The penalty (not mentioned by Bosher): imprisonment for six years.[18] Andrew Dickson White’s Fiat Money Inflation in France continues the analysis:

Later, on September 8, 1793, the penalty for such offenses was made death, with confiscation of the criminal’s property, and a reward was offered to any person informing the authorities regarding any such criminal transaction. To reach the climax of ferocity, the Convention decreed, in May 1794, that the death penalty should be inflicted on any person convicted of “having asked, before a bargain was concluded, in what money payment was to be made.”[19]

It is not surprising that an increase of circulation from 400 million to 40 billion in a span of four years would have produced price inflation. What is surprising is that a book seriously advertising itself as “conservative economics” could argue, as one widely read study does, that “The fact that they were destroyed as money by the gigantic counterfeiting operations of the money creators later, does not detract from their validity.”‘” Burke, almost two centuries ago, knew better than that!

Price and Wage Controls

On September 29, 1793, the “Law of the Maximum” was declared, setting forth a system of price and wage controls. But, as White says, it “could not be made to work well—even by the shrewdest devices. In the greater part of France it could not be enforced.”[21] It was abolished in the latter months of 1794, a total disaster. It was as unworkable as the early attempts to control prices and wages had been in New England, and it was as disastrous as the controls had been in the American Revolution.[22]

Burke had foreseen these events in 1790. The politics of mass inflation, he warned, would create a gambler mentality in the minds of French citizens, a mad rush to stay ahead of rising prices. He warned the citizens of France —or at least those who might be reading his book — of this fact:

Your legislators, in everything new, are the very first who have founded a commonwealth on gaming, and infused this spirit into it as its vital breath. The great object of these politics is to metamorphose France from a great kingdom into one great play table; to turn its inhabitants into a nation of gamesters;… With you a man can neither earn nor buy his dinner without a speculation. What he receives in the morning will not have the same value at night… Industry must wither away. Economy must be driven from your country. Careful provision will have no existence.[23]

It is not simply that industry will decline or that people will have to become speculators. The real curse of mass inflation is that it harms the ignorant, the unprotected, the citizen who is not aware of the nature of the new, inflationary game. In the name of democracy, the French revolutionaries had constructed a system that favors the elite — an elite made up of the least honorable, least productive men in the community.

The truly melancholy part of the policy of systematically making a nation of gamesters is this, that though all are forced to play, few can understand the game; and fewer still are in a condition to avail themselves of the knowledge. The many must be the dupes of the few who conduct the machine of these speculations. What effect it must have on the country people is visible. The townsmen can calculate from day to day, not so the inhabitant of the country. When the peasant first brings his corn to market, the magistrate in the towns obliges him to take the assignat at par; when he goes to the shop with the money, he finds it seven per cent worse for crossing the way. This market he will not readily resort to again. The townspeople will be inflamed; they will force the country people to bring their corn.[24]

The nation will be torn with social conflict. This, in turn, will create disruptions, further instability, and the destruction of law and order. His warnings were in vain, and his prophecies came true.

Convertibility Makes a Difference

There is a difference, he said, between the paper money of England and that of France, contrary to certain French writers. “They forget that, in England, not one shilling of paper money of any description is received but of choice; and that it is convertible at pleasure, in an instant and without the smallest loss, into cash [specie] again.”[25] The Napoleonic Wars were to bring an end to convertibility in England for temporary periods, but Burke’s polemical point was grounded in fact: the presence of the threat of specie demands by the public acted as a restraint on the process of fractional reserve banking, thus reducing the extent of monetary inflation. But French leaders have gone mad, he said:

The only difference among their financial factions is on the greater or the lesser quantity of assignats to be imposed on the public sufferance. They are all professors of assignats. Even those whose natural good sense and knowledge of commerce, not obliterated by philosophy [by which Burke meant the a priori theories of Enlightenment theorists], furnish decisive arguments against this delusion conclude their arguments by proposing the emission of assignats. I suppose they must talk of assignats, as no other language would be understood. All experience of their inefficiency does not in the least discourage them. Are the old assignats depreciated at market?—What is the remedy? Issue new assignats.[26]

Burke’s jibes at the self-deceived and self-assured manipulators could (and perhaps someday will) be lodged against our contemporary “metaphysical arithmeticians,” the inflation-minded econometricians:

In all this procedure I can see neither the solid sense of plain dealing nor the subtle dexterity of ingenious fraud. The objections within the Assembly to pulling up the floodgates for this inundation of fraud are unanswered, but they are thoroughly refuted by a hundred thousand financiers in the street. These are the numbers by which the metaphysic arithmeticians compute. These are the grand calculations on which a philosophical public credit is founded in France. They cannot raise supplies, but they can raise mobs.[27]

The people of France ought to see where a philosophy of state theft is leading them:

I see the confiscators begin with bishops and chapters, and monasteries, but I do not see them end there…. Flushed with the insolence of their first inglorious victories, and pressed by the distresses caused by their lust of unhallowed lucre, disappointed but not discouraged, they have at length ventured completely to subvert all property of all descriptions throughout the extent of a great kingdom. They have compelled all men, in all transactions of commerce, in the disposal of lands, in civil dealing, and through the whole communion of life, to accept as perfect payment and good and lawful tender the symbols of their speculations on a projected sale of their plunder. What vestiges of liberty or property have they left? [28]

Once begun, this madness will be compounded. “If possible, the next Assembly must be worse than the present. The present, by destroying and altering everything, will leave to their successors apparently nothing popular to do. They will be roused by emulation and example to enterprises the boldest and the most absurd.”[29] This, of course, is precisely what was to take place in France. “So violent an outrage upon credit, property, and liberty as this compulsory paper currency has seldom been exhibited by the alliance of bankruptcy and tyranny, at any time or in any nation.”[30] Yet it got much worse in the next five years.

Theft is an insidious philosophy, whether public or private in scope. Short-run benefits of the confiscation of another’s property tempt men to expand their activities and bring on personal and national disaster. Burke’s warnings went unheeded by the French government in 1790. Today’s metaphysical arithmeticians consider such opinions as Burke’s utterly narrow, dogmatic, and unenlightened by the principles of modern thought. The results of today’s confiscators will be comparable to the results of the French Revolution, since the principles are similar. If not mass inflation, then it will be some Napoleon of the mass media. Perhaps it may be both.


1) Nation’s Business (July, 1972), pp. 28 ff.

2) See Ireton’s remarks in A. S. P. Woodhouse (ed.), Puritanism and Liberty (London: Dent, 1938), pp. 52 ff., 64 ff. On the setting of the Putney Debates, see Robert S. Paul, The Lord Protector: Religion and Politics in the Life of Oliver Cromwell (Grand Rapids: Eerdmans, 1955), Chap. 7.

3) Burke, Reflections on the Revolution in France, edited by Thomas H. D. Mahoney (Indianapolis: Bobbs-Merrill, Liberal Arts Press, 1955), p. 126.

4) Ibid., p. 24.

5) Cf. Christopher Hill, Reformation to Industrial Revolution (Baltimore: Penguin, 1969), p. 270; Herbert Heaton, Economic History of Europe (rev. ed.; New York: Harper & Row, 1948), pp. 413-14, 419; Shepard B. Clough, The Economic Development of Western Civilization (New York: McGraw-Hill, 1959), pp. 296-97.

6) Reflections, p. 224.

7) Heaton, p. 410.

8) Reflections, p. 108.

9) Ibid., p. 151.

10) J. F. Bosher. French Finances, 17701795 (New York: Cambridge University Press, 1970), p. 24.

11) Hamilton wrote in his First Report on Public Credit (1790): “If all the public creditors receive their dues from one source, distributed with an equal hand, their interest will be the same. And, having the same interests, they will unite in the support of the fiscal arrangements of the Government….” Robert Birley (ed.), Speeches and Documents in American History (New York: Oxford University Press, 1951), Vol. I, p. 159. Yet, as Prof. John C. Miller notes, “The national debt, instead of cementing the nation politically, acted as a divisive force….” Alexander Hamilton and the Growth of the New Nation (New York: Harper Torch-book, 1964), p. 255.

12) Reflections, pp. 178-79.

13) Ibid.

14) Charles Holt Carroll, writing for Hunt’s Merchants’ Magazine in the 1850′s and 1860′s, produced some excellent analyses of the process of the monetization of debt: Organization of Debt Into Currency and Other Papers (New York: Arno Press, 1971). This was the essence of Hamilton’s “sinking fund”: Miller, p. 257. It is also the essence of the Open Market Committee of the Federal Reserve System: Herbert V. Prochnow (ed.), The Federal Reserve System (New York: Harper & Bros., 1961), Chap. 7.

15)Bosher, pp. 273-74.

16) Ibid., p. 273.

17) Ibid., P. 274.

18) Andrew Dickson White, Fiat Money Inflation in France (Foundation for Economic Education, [1912] 1959), pp. 78-79.

19) Ibid., p. 79.

20) Gertrude Coogan, Money Creators (Hawthorne, Calif.: Omni Books, [1935] 1963), p. 320. For a critical analysis of the writings of Miss Coogan, see my essay, “Gertrude Coogan and the Myth of Social Credit,” An Introduction to Christian Economics (Nutley, N. J.: Craig Press, 1973).

21) White, p. 77.

22) On Puritan economic controls, see Richard B. Morris, Government and Labor in Early America (New York: Columbia University Press, 1946), pp. 56. These tended to die out after 1675. On the controls during the American Revolution, see Percy Greaves, “From Price Control to Valley Forge,” THE FREEMAN (Feb., 1972).

23) Reflections, pp. 226-27.

24) Ibid., p. 227.

25) Ibid., p. 273. When Burke speaks of “cash” he means “specie”: p. 283.

26) Ibid., p. 276.

27) Ibid., p. 281.

28) Ibid., pp. 174-75.

29) Ibid.. p. 232.

30) Ibid., p. 141. 

  • Dr. North is president of The Institute for Christian Economics in Tyler, Texas. He was FEE’s director of seminars in the early 1970s and has served as a member of the board of trustees.