The True Gold Standard (Second Edition)
Jacques Rueff: The Greatest Economist of the 20th Century
Jacques Rueff was a soldier, scholar, and statesman. Born in Paris in 1896, Rueff served in the French army during World War I before gaining admission to Ècole Polytechnique where he studied economics. Upon graduation, Rueff entered the civil service in 1923 as an inspecteur des finances. It was in this role that the young Rueff played a part in the comprehensive French economic reforms led by Raymond Poincaré between 1926 and 1928. Although these reforms helped France to escape some of the devastation seen in the United States, they were left incomplete with the worldwide onset of the Great Depression.
This, however, was the only the beginning of Jacques Rueff’s career. He went on to serve on the staff of the League of Nations, teach at the university level, become an assistant governor of the Bank of France, and serve on the post-World War II reparations commission. Rueff continued counseling the French government on financial and economic matters, also writing and lecturing extensively on the subjects. Over the course of these same three decades, France saw “debt piling up remorselessly with each change in the government, the franc sinking, and the national credit on the verge of exhaustion.” By the mid-1950s, “the franc became chronically overvalued in terms of foreign currencies and there [were] persistent deficits of external payments.”
It was in this economic climate that Charles de Gaulle rose to power, destroying the Fourth French Republic and establishing the Fifth Republic in its stead. Of utmost importance, de Gaulle needed strong economic advisors. In September 1958, he appointed Antoine Pinay—a politician—as his Minister of Finance and Professor Jacques Rueff—a technician—as the chairman of a committee to examine France’s financial problems. De Gaulle hoped to return France to greatness.
Over the next several months, de Gaulle’s Cabinet members debated how to restore growth and prosperity in France. Eventually, even the skeptics were won over by Professor Rueff’s plan described as “la vérité des prix—a return to the price mechanism of the market.” By the end of 1958, President de Gaulle announced the elements of Rueff’s economic plan to the nation.
Fiscal policies were focused on revenue and spending in order to bring about budgetary equilibrium. On the revenue side, so-called “sin” taxes were increased, tax loopholes were closed, and tax evaders were punished. On the spending side, social security benefits were abolished, universal handouts were minimized, and industry subsidies were reduced or eliminated.
Monetary policy was no less rigorous. The franc was devalued by more than seventeen percent in order to stimulate exports and to correct France’s chronic balance-of-payments deficit. In contrast to the United States, France’s balance-of-payments deficits disappeared within several months of implementing Rueff’s monetary policy. A decade later, the United States’ deficits continued spurring Rueff to comment that, “The United States balance of payments deficit will continue so long as the international monetary system which generated it survives.” By encouraging trade with other nations, increased competition also brought prices down in France. Initially, the franc fixed its value to the dollar. Eventually, the “light” franc was replaced with the “heavy” franc via direct gold convertibility.
According to an article published in Fortune in May of 1959—less than six months after de Gaulle announced the economic plan—the effects of Rueff’s plan were already being felt “in part because of the improved trade balance, in part because of dishoarding, and an inflow of capital from abroad encouraged by the new confidence in the stability of the franc and of prices.”
In the years that followed the historic revolution of the Fifth Republic brought economic prosperity and restored stability across France. Rueff’s plan withstood the ultimate—and only true—test of success, evaluated in the “laboratory of human experience.” According to Rueff, “All economic progress is nothing, basically, except an incessant struggle between the call of the future and the defense of the past.” Although Jacques Rueff died nearly forty years ago at the age of 82, his memory and teachings live on. Among his many students was Lewis E. Lehrman who said of his beloved teacher, “Fondly do we hope, fervently do we pray that some great statesman will arise to lead the free world toward the age of financial order, clearly set out for us long ago by a great statesman of France, Jacques Rueff.”
Jacques Rueff and The Lehrman Institute
Among the publications of The Lehrman Institute under the direction of Lewis E. Lehrman was the five-volume Oeuvres Complètes de Jacques Rueff, one of France's great economists of the 20th century - edited by Emil-Maria Claasen and Georges Lane (published by Plon). In 1979, the Trustees of The Lehrman Institute and the Association Jacques Rueff jointly established a Jacques Rueff Memorial Prize in honor of the late French economist and statesman. The Rueff Prize was first presented in November 1979 to journalist Paul Fabra, the noted French journalist who wrote extensively on economic and financial subjects for Le Monde. His works included L'Anticapitalisme: Essai de Réhabilitation de l'économie politiquue, a study of the writings of David Ricardo.
Columbia Professor Robert Mundell was presented with the Second Jacques Rueff Prize at the Palais de Luxembourg on October 20, 1983 19 years before Mundell was awarded the Nobel Prize. In making the presentation to Mundell, Institute Chairman Lewis Lehrman noted that "He has called for a restoration of the gold standard in order to save the Western world from the twin catastrophes of deflation and inflation."
On January 20, 1987, Mr. Lehrman presented the third Rueff Prize to Edouard Balladur, the French Finance Minister in a ceremony presided over by Prime Minister Jacques Chirac in Paris. In his remarks, Mr. Lehrman said Balladur is "especially attractive as a recipient of this prize: for it was Jacques Rueff's oft expressed wish that the all important problems of political economy should not remain the arcane preserve of a few academics; but should be the domain of innovative financial craftsmen."
Introduction to The Collected Works of Jacques Rueff
L’auteur et ses Oeuvres
Lewis Lehrman, président du Lehrman Institute, a décidé de publier aux Etats-Unis ce qu’on est convenu d’appeler mes « oeuvres complètes », déjà imprimées ou encore inédites.
C’est une initiative généreuse. Mais il l’accompagne d’un voeu: que je facilite la compréhension de ces textes en les faisant précéder d’une autobiographie. Celle-ci devrait être un portrait de l’auteur, tel que, dans le miroir de ses oeuvres, à la lumière crépusculaire d’une fin de vie, il se voit.
Je dois dès l’abord affirmer que j’ai peu de goût pour l’autobiographie. Je pense, comme Montesquieu, que dessiner soimême son portrait « c’est faire une assez sotte chose » et « qu’à la base de toute introspection, il y a goût de se contempler, qu’au fond de toute confession, il y a désir d’être absout ».
Bien plus même: j’estime avec Paul Valéry que « la confidence [de l’autobiographe] songe toujours á la gloire, au scandale, à l’excuse, à la propagande », et que « quand on ne sait plus que faire pour étonner et survivre, on se prostitute, on livre ses pudeurs, on les offre aux regards ».
Ce n’est pas ce genre de confidence que je présenterai ici. Je sens intensément avec Henri Bergson que « la liberté concrète chemine sur sa propre lancée et que, d’ordinaire, elle n’a vas eu le choix ». Le danger de l’autobiographie, c’est qu’elle substitue sans cesse « le tout-fait au se faisant ». C’est le « se faisant » que j’évoquerai ici. Il ne sera pas un portrait, mais une histoire.
Au cours d’une vie qui fut longue, j’ai produit de nombreux ouvrages, sans jamais interrompre une carrière qui a eu, dans le domaine de l’action, des aspects très divers.
J’ai l’impression que l’ensemble de ces travaux, malgré leur diversité, témoigne, dans son inspiration, d’une profonde unité.
C’est la continuité de mon oeuvre – écrite ou vécue – que je soulignerai dans le présent livre. De chaucun de mes ouvrages, de toute mes activités, il tentera d’exposer la genèse. Il me permettra aussi de faire apparaître les raisons pour lesquelles un homme qui ne faisait pas profession d’écrire a été constamment animé par la nécessité d’exprimer et par la passion de convaincre.
Certes, je n’ai pas toujours réussi. J’ai rencontré des opposants et même, plusieurs fois, des adversaires. Qu’ils se rassurent. Je ne me propose pas de les juger. Je sais que, dans tous les cas, ils avaient leurs raisons, si fausses ou critiquables, voire mal intentionnées, qu’elles m’apparaissent.
C’est donc en pleine sérénité et en toute humilité que je présente ici l’histoire naturelle d’une oeuvre qui, en toute hypothèse, touche à sa fin. Puisse-t-elle en faire pardonner l’ampleur et en montrer la nécessité.
For more information about Jacques Rueff:
Jacques Rueff, the Age of Inflation, and the True Gold Standard
Jacques Rueff: Political Economist for the 21st Century?
The Monetary Conservative: Jacques Rueff and Twentieth-century Free Market Thought.
BY JACQUES RUEFF: