French franc

• 1. Introduction

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  The French franc began in 1360 as a gold coin minted to pay the ransom of King John II of France. That single coin showed the king on a richly decorated horse, which earned it the name franc a cheval, meaning free on horseback. The obverse legend named the king as Francorum Rex, King of the Franks, giving a second reason to call the coin a franc. For more than six centuries afterward, the franc would carry the weight of France's wars, revolutions, and inflation.

  How did a coin worth one livre tournois become the currency that a nation quoted prices in until the year 2002? Why did French residents keep counting in old francs long after the money itself had changed beneath their feet? The answers run through Carolingian silver, a revolutionary decree, a Nazi occupation, and a final fixed conversion of 6.55957 francs to a single euro.

• 2. Carolingian Roots

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  Emperor Charlemagne introduced his monetary system in 781 AD to the Frankish Carolingian Empire. A Livre, or pound, of silver was divided into 20 sols, and each sol split into 12 deniers. The first livre and denier weighed 407.92 grams and 1.7 grams of the finest silver available. For the next 500 years, only the denier existed as an actual coin. The sou and the livre worked merely as accounting multiples of that single penny.

  Under the Capetian dynasty around the year 1000, livres and deniers held 305.94 grams and 1.27475 grams of fine silver. The French mark of 8 ounces equalled 244.752 grams, the weight of 192 deniers or 16 sols of that period. French kings then struggled for centuries to fix a standard across a realm of feudal rulers who claimed their own right to issue money.

  During the reign of King Louis IX, around 1266, France gained its preferred accounting system. The silver gros tournois was struck at 58 to a French mark, holding 4.044 grams of fine silver, and valued at one sol in the Touraine region. Its reputation and handling convenience over the debased deniers carried the gros tournois across the rest of Western Europe.

• 3. Coin Of Stable Money

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  John II of France could not strike enough francs to pay his own ransom, so he voluntarily returned to English captivity, where he died a prisoner. His son Charles V was left to pick up the pieces. Charles pursued reform and stable coinage, and an edict dated the 20th of April 1365 established its centrepiece. That gold coin, officially the denier d'or aux fleurs de lis, showed a standing figure of the king beneath a canopy. It is universally known as the franc a pied, free on foot.

  Following the theories of the mathematician and royal advisor Nicole Oresme, Charles struck fewer coins of better gold than his ancestors. In the deflation that followed, prices and wages both fell, but wages fell faster, and debtors had to repay in better money than they had borrowed. Etienne Marcel, the Mayor of Paris, exploited that discontent to lead the Jacquerie revolt, which forced Charles V out of the city. The franc itself fared better and became linked with money stable at one livre tournois.

  Henry III drew on that very association when he tried to stabilize French currency in 1577. Inflows of gold and silver from Spanish America had spread inflation through the world economy. The States General meeting at Blois pressed the crown to stop manipulating coin values. Henry III agreed and revived the franc, now as a silver coin worth one livre tournois. This coin and its fractions circulated until 1641.

• 4. Spanish Models And Debasement

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  King Louis XIII abolished the unpopular francs and ecus in 1641 in favour of coins modelled on Spanish money. He also discarded the livre parisis system, leaving the livre tournois in exclusive use. The Spanish dollar inspired the Louis d'argent, struck at 9 to a French mark of silver and valued at 3 livres tournois. The Spanish doubloon inspired the Louis d'or, valued at 10 livres.

  The War of the Spanish Succession from 1701 to 1714 dragged France into another turbulent period and another debasement. Under Louis XV in 1726, the silver ecu d'argent was issued at 8.3 to a mark of silver and valued at 6 livres. A new gold Louis d'or held 7.4785 grams of fine gold and was valued at 24 livres.

  The onset of the Industrial Revolution in Great Britain raised the value of gold during the reign of Louis XVI. By 1785 the gold to silver ratio had risen to 15.5, cutting the gold content of the 24-livre Louis d'or. Assays of the period show coins held roughly 1.5 percent less bullion than officially specified. That hidden shortfall would soon be measured exactly, when the livre gave way to a wholly new unit.

• 5. Decimal Revolution

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  The National Convention of Revolutionary France established the decimal franc as the national currency in 1795. One franc equalled 10 decimes or 100 centimes, set at 4.5 grams of fine silver. An act of the 7th of April 1795 mandated decimalization of the franc alongside weights and measures. Silver coins now carried their denomination clearly marked, such as 5 FRANCS, and quoting prices in francs became obligatory. This ended the old regime's practice of striking coins with no stated value, like the Louis d'or, then issuing royal edicts to manipulate them.

  France led the world in adopting the metric system. It was the second country to convert from a non-decimal to a decimal currency, following Russia's conversion in 1704, and the third to adopt a decimal coinage after the United States in 1787. The first French decimal coinage used allegorical figures symbolizing revolutionary principles. The franc became the official currency of France in 1799.

  During the Republic, old gold and silver coins were withdrawn and exchanged for printed assignats, first issued as bonds backed by confiscated church goods. Too many assignats entered circulation, exceeding the value of the national properties, and coins grew rare through requisitioning and hoarding. Confidence collapsed into hyperinflation, food riots, and the fall of the French Convention. After a coup d'etat led to the Consulate, the First Consul gathered sole legislative power.

• 6. Napoleon And The Union

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  The Banque de France was created in 1800 as a federal establishment with a private board, commissioned to produce the national currency. In 1803 the franc Germinal was established, named after a month in the revolutionary calendar, with a gold franc holding 290.034 milligrams of fine gold. Gold and silver then circulated interchangeably on a 1 to 15.5 ratio until 1864, when all silver coins except the 5-franc piece were debased from 900 to 835 parts per thousand.

  This coinage abandoned the revolutionary symbols and showed Napoleon in the manner of Roman emperors, first as Bonaparte Premier Consul. After his coronation in 1804, coins read Napoleon Empereur, and in 1807 the reverse named France as Empire Francais. By analogy with the old Louis d'or, these were called gold Napoleons. Succeeding governments kept Napoleon's weight standard, and the system survived the Bourbon Restoration and lasted until 1914.

  France was a founding member of the Latin Monetary Union, a single currency used mainly among Romance-speaking and Mediterranean states between 1865 and the First World War. The common currency was based on the franc germinal, while member countries minted local denominations such as the peseta, redeemable across the bloc at 1 to 1 parity. In 1873 the union moved to a purely gold standard of 1 franc to 0.290322581 grams of gold.

• 7. Wars And Devaluation

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  The outbreak of World War I forced France to leave the gold standard of the Latin Monetary Union. War expenditure, inflation, and reconstruction financed by printing money cut the franc's purchasing power by 70 percent between 1915 and 1920. The currency depreciated a further 43 percent between 1922 and a balanced budget in 1926. That fall was worsened by the insistence of the United States that French war debts be repaid within 25 years at a minimum of 4.25 percent interest per year. After a brief return to the gold standard between 1928 and 1936, the franc resumed its slide, until by 1959 it was worth less than 2.5 percent of its 1934 value.

  During the Nazi occupation of France from 1940 to 1944, the franc became a satellite currency of the German Reichsmark at 20 francs for 1 Reichsmark. The coins were changed, with the words Travail, famille, patrie replacing the republican triad Liberte, egalite, fraternite, and the emblem of the Vichy regime added. After the liberation, the United States attempted to impose its own occupation franc, which General De Gaulle averted.

  After World War II, France devalued repeatedly within the Bretton Woods system. The rate moved from 480 francs to the British pound in 1945 to 980 by 1949, then to 1382.3 by 1958. This long erosion set the stage for a drastic act of arithmetic that would shave two zeros off every price in France.

• 8. The New Franc And The End

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  In January 1960 the French franc was revalued, with 100 old francs making one nouveau franc. The abbreviation NF appeared on the 1958 design banknotes until 1963. Old one- and two-franc coins kept circulating as new centimes, while the one-centime coin never circulated widely. Inflation continued regardless, with prices rising 72 percent between 1950 and 1960 and 51 percent between 1960 and 1970. When the euro replaced the franc on the 1st of January 1999, the franc was worth less than an eighth of its 1960 purchasing power.

  Many French people kept using the term old francs for large sums, such as the prices of houses, apartments, and cars. Even those who had never used the old franc still quoted prices in it, confusing tourists and people abroad. Lottery prizes were often advertised in centimes, equal to the old franc, to inflate the perceived value at stake. Multiples of 10 new francs were sometimes called mille francs or mille balles, balle being slang for franc. The new franc itself earned the nickname franc lourd, the heavy franc.

  From the 1st of January 1999, the franc was fixed against the euro at 6.55957 francs to 1 euro. Euro coins and notes replaced it entirely between January and March 2002, and all franc coins and banknotes ceased to be legal tender in January 2002. Banknotes remained convertible until the 17th of February 2012. By that date, franc notes worth some 550 million euros remained unexchanged, allowing the French state to register the sum as revenue.