1841 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72 73 74 75 76 77-78 -79

TABLE OF THE MOVEMENT OF SILVER DURING THE SAME PERIOD.

TABLE OF THE COINAGE OF GOLD AND SILVER IN FRANCE, 1803-75, DURING THE

During the years 1820-50, when the ratio remained below the legal 15 and there was a profit on the import of silver, the total silver coinage of the French Mint amounted to £127,458,322, while that of gold reached only £19,333,854. In the succeeding period, 1850-66, when the ratio changed and remained for fifteen or sixteen years in favor of gold, the total gold coinage reached £292,416,951, while the total silver coinage was scarcely more than one and one-quarter millions (£1,315,532).

At the beginning of this second period, 1851, the Bank of France held in its reserves approximately only 34 millions sterling of gold, whereas its silver amounted to more than 19 millions. At the close of the period indicated, 1866, the bank was holding 23 mi lions sterling of gold against nearly 5 millions of silver. In the former case the proportion of silver formed 85 per cent. of the total, in the latter only 19 per cent. TABLE OF THE RESERVES OF THE BANK OF FRANCE, 1851-76.

The statistics of the Latin Union, up to the suspension of the bimetallic system will be separately dealt with.

Speaking only of the experience of France during these years of bimetallic régime. the ebbing and flowing experience which has throughout been instanced as the chief characteristic of such régime is most strongly marked. The legal ratio did not give the market ratio, and so far was it from giving France a stable currency, it was the one thing which unsettled it and made a stable currency impossible. The expose des motifs of the law of 1876, which will be referred to in another connection below, puts the matter with official brevity. "The variations of the commercial from legal 15% ratio remained normal during the years 1824-67 All the same they sufficed to modify greatly the composition of the French circulation. After the predominance of silver, which became marked in 1847, the ratio from 1847-67 introduced gold in a large proportion, and measures had to be taken to retain in France the smaller silver coinage. Our silver Monnaie d'appoint of .835 fine was created for this purpose."

To regard this question from a theoretic and international point of view, to the exclusion of any regard for the separate national interests of France, is a sheer absurdity. It mattered little or nothing to France that by unloading the stores of silver she happened to possess at the time of the gold discoveries of the fifties she helped to steady the ratio for the world at large. It did, however, matter, and very much, that this process of exchange from the one metal to the other was attended with public loss, balanced only by illicit private gain, and with a disturbance of trade in every town of France through the disappearance of the smaller silver specie. Whether or not France or any other country is called upon to sacrifice herself thus-not once but every time the ratio fluctuates from below to above the legal ratio or vice versa, for the sake of an ideal, bimetallic, regulating, function-let common sense decide.

FRENCH MONETARY COMMISSIONS.

THE COMMISSION OF 1867.

The French monetary commission of 1867 speaks thus of the situation :

"It is well known by all that this ratio (of 1803) by the simple reason of its being fixed could not remain correct. There was quickly a premium on gold, and silver remained almost alone in circulation until near 1850. The discovery of the mines of California and Australia suddenly changed this situation by throwing into the European market a very considerable quantity of gold. By the side of this force, which tended to create a divergence from the legal ratio by lowering gold, there was another which occasioned a rise of silver. Under the influence of various circumstances, too long to enumerate, the needs of the extreme East had grown in unusual proportions, and as silver is alone in favor there, it was exported in enormous masses. There was a premium

on silver to the extent of 8 per mille, and it disappeared almost completely from circulation, yielding place to gold.

Preoccupied by the situation the government charged a commission to study the measures to be taken. Its labors are summed up in the report of N. de Bosredon (1857). After examining the system tending to preserve silver money intact by lowering the value of gold money, and conversely the system tending to the adoption of the gold standard by reducing the silver money to the state of billon, the commission did not decide between them. It confined itself, in fact, to counselling the Government to a transitory step-the raising of the export duties on silver * * *. The exportation of silver, therefore, continued; and if the disappearance of 5 franc pieces was not remarked, because they were replaced by gold, it was not the same with the scarcity of pieces of a smaller value employed in petty payments.

“Being informed of the obstructions to retail commerce by complaints carried before the Senate, and instructed by the example of Switzerland, which had in 1860 reduced the standard of its divisional money, the Minister of Finance appointed a commission, 1861, to study the remedy to be applied to the evil. This commission counseled the reduction of the standard of pieces of less than 5 francs to .834 fine. It did this in complete knowledge of the cause, fully recognizing that in so doing the monetary unity of silver, characteristic of our system, would be thereby broken, at any rate for its circulating form; for while the franc no longer existed in law, the 5-franc was disappear ing in fact, so that the change was equivalent to the establishment of a gold standard.” This advice of the commission was, however, by the law of 1864, applied only to pieces of 50 or 20 centimes.

THE LATIN UNION.

The next step in the process was the formation of the Latin Union in the year following. The above-quoted commission speaks of the intentional aspect of this Union in these words: "This convention places in the front rank gold money, and reduces the pieces of silver of 2 francs and less to the role of token money. It therefore definitely determines (consacre) the ascendency of the gold francs, and solves practical difficulties arising from the double standard."

This was written in 1867, less than two years after the formation of the Latin Union. It is not the view which prevails among bimetallists to-day as to the purpose and intentional bearing of that Union; but it is the historic truth none the less, and it was only the complete revolution in the conditions of production of the precious metals which made itself felt from 1871, which has given the Latin Union the aspect of a theoretic concert for the maintenance of, rather than as a defense against, a bimetallic system. If silver had not fallen in 1871 the Latin Union would still be the bulwark of defense of bimetallic France against the action of bimetallic law.

The formation of the Latin Union, therefore, was a measure of defense against the action of the bimetallic system in those countries which had adopted the monetary system of France, and lay exposed to all its disastrous fluctuations. The first and moving factor in its formation was Belgium. So far as related to silver, Belgium had adopted the French system by her monetary law of 5th June, 1832. By the first article of this law the monetary suit was fixed at the silver franc of 5 grms. weight, and 9 fineness. For years Belgium endeavored to maintain this law in its integrity. Public opinion, however, demanded the admission of French gold at its normal value, and this was conceded and decreed by the law of 4th June, 1861. From that moment she felt all the oscillating movement which France was experiencing. The declaration of article 1, of the Law of 1832 became a dead letter; the gold standard took the place of the silver standard, and equally with France, Italy and Switzerland, Belgium had to witness the disappearance of her small silver coins. To the previous abundance there succeeded a penury of small change, although the drain was not so immediately felt because of large reserve of silver 5-franc pieces (amounting to 48 millions of francs), held by the National Bank. In slightly over a year, 1st June, 1861, to 8th November, 1862, this stock of 48,645,000 francs had sunk to 14,629,000 francs, and in alarm the National Bank ceased, on the latter date, all payments in 5-franc pieces. Concurrently with this drain of the 5 franc pieces, the reserve of silver coins of less value began 10 be seriously affected by the sapping influence. During the two following years, 1861-63,

there was little commerce in the precious metals owing to the American war. But in 1863 the movement of drain recommenced. The reserve of 5-franc pieces and the stock of divisional coins of lower denomination fell rapidly-to so low a point indeed, as to become quite insufficient for the ordinary trade and small change demanded of the country. After a slight recovery in September, 1865, the same downward course continued. The smaller coins of 1-franc pieces and 50 centimes became so scarce that the bank could not supply the demands of manufacturers for the payment of wages, and the government had to have resort to the coinage of nickel for small divisional money. The simultaneous experience of Switzerland and Italy is not so capable of statement and exact expression. But it was similar in kind. Previous to 1865 a net balance of over 12 millions sterling (consisting almost if not entirely of silver) had left Italy, and it was known to be the danger of entirely losing her silver which led Italy to the suspension of cash payments on April 30, 1866, and to her acquiescence in the Latin Union. It was not, however, Italy, but Belgium, who first raised the note of alarm. Conscious that her monetary community with France made any independent efforts quite futile, the Belgium government proposed to France a monetary union for the countries which had adopted the franc as the basis of their currency. Taking up the proposition, France invited Italy and Switzerland, together with Belgium, to send delegates to a monetary conference at Paris. At this conference Belgium proposed the adoption of the single gold standard—the silver pieces including the 5-franc pieces to be lowered by an agio, and made divisional money. Italy and Switzerland were of the same opinion, but their scheme failed before the opposition of France, and the final outcome of the conference was the establishment of the convention of 23d December, 1865.

This convention, which instituted the Latin Union, came into force on the 17th of August, 1865, and under it one slight change is made in the internal currency system of France. The hitherto full-valued silver coinage from 2 francs downward was changed into token money (being reduced to .835 fine), the 5-franc piece remaining as full legal tender.

The union was to last for fifteen years. It established an identity in the monetary system of the four powers, as far as weight and standard were concerned, and prescribed free coinage for any individuals bringing metals to the mints-of gold into any from, and of silver into 5-franc piece 3; and the reciprocal acceptance of those pieces in any of the States of the Union. Finally the minting of each State for national or currency purposes was limited to 6 francs per head.

This limitation, together with the regulation adopted, that the divisional coins should be issued at a rate inferior to that of the monetary standard, must be regarded as a measure of mutual defense against the sapping of the smail coinage which had previously been experienced. According to this clause the maximum of mintings for national or currency purposes was presented thus:

For Belgium....

France..
Italy....
Switzerland..

Francs. 32,000,000

239,000,000

141,000,000

17,000,000

For a time everything bloomed, the minting went merrily on, and private individuals (foreigners) reaped a profit at the expense of France. With the heavy fall in the ratio which made itself marked in 1873, however, events became too strong even for the Union, and Belgium took the initiative by passing a law enabling her government to suspend or limit the coinage of the 5-franc piece. This principle was subsequently adopted by all the States of the Latin Union. During the years 1874-76 three annual conferences of the Union were held at Paris, with the result that the limitation of the coinage of the 5-franc piece was fixed thus: