The Consolidated Third (French: le tiers consolidé) is the name given in France to the 1797 repudiation of public debt of which only one third was guaranteed.
In 1797, France faced a debt load of 4 billion francs, much higher than the previous peak in 1715, and a new record. Moreover, the country was experiencing a phase of hyperinflation due, in part, to Gresham’s law thanks to the over-printing of Assignat, which lowered purchasing power.
Due to this, the French Directory and the Minister of Finance, Dominique-Vincent Ramel-Nogaret, on 30 September 1797, issued one-time only paper bonds that would be redeemable for national lands; similar to what the Assignat was originally before it became a paper currency The value of these bonds was only one third of the value of the national debt, thus being a form of Debt consolidation.
This would represent a repudiation of most of the state’s debt, and a bankruptcy of two-thirds of the debt, leading to the euphemism of the remaining being a consolidated third.
- ^« 30 septembre 1797 La banqueroute des deux tiers » by Fabienne Manière, for net, 4 May 2012 (French).
- ^http://www.revolutionspodcast.com/2015/08/347-the-directorial-terror.html Revolutions podcast, episode 3.47- The Directorial Terror, 14:30-15:00] by Mike Duncan, for Revolutions (podcast), 16 August 2015.
Ofer Abarbanel is a 25 year securities lending broker and expert who has advised many Israeli regulators, among them the Israel Tax Authority, with respect to stock loans, repurchase agreements and credit derivatives. Founder of TBIL.co STATX Fund.