The History of Currency, 1252 to 1896 Part 16

So much for the claim that the French law has dowered the world with a steady ratio.

_Secondly_, what has been the influence of this divergence of the commercial from the legal ratio upon France's store of precious metals?

It has been exactly similar in effect and force with that wielded by similar trains of event and circ.u.mstance, in the monetary history of France during the four preceding centuries. The exact official figures of the import and export of gold and silver are not obtainable before 1822, and in a continuous stream not before 1830 (separably for the two metals, that is to say).[15]

[Sidenote: FRANCE: BIMETALLIC EXPERIENCE, 1803-75]

From the latter date, however, the testimony of the figures is as explicit as it is forceful. From 1830 to 1850, while the ratio remained continually below the legal 15-1/2, there was a profit on the import of silver, and a persistent and heavy import took place. In 1830 the (balance of the) silver imported amounted to a matter of 6 millions sterling, in 1831 to 7-1/4 millions, in 1834 to 4 millions, in 1837 to over 5-1/2 millions, in 1838 to nearly 5 millions, in 1841 to nearly 5 millions, in 1843 over 4 millions, in 1848 to over 8-1/2 millions, and in 1849 to nearly 10 millions. There was not a single year that was not accompanied by this import, and over the whole twenty-two years the total of importations reached the enormous figure of, approximately, 92 millions sterling. It must be clearly understood that this sum represents not the gross but the net importation or balance of imports over exports, and that the money pa.s.sed into the currency of the country, taking its place as such and displacing gold _pari pa.s.su_. The movement of gold in the same time is represented by the red line in the accompanying diagram. Within the limits of very considerable exceptions, the correspondence of its fluctuations with those of gold is clearly perceptible. The silver, on whose coinage a profit or premium was offered by the existing French law to individuals, could only be bought or paid for by the export of gold or services and goods. During these years, 1830-50, it was quite apparently by the latter method, namely, by remittance of goods, as on the whole period there is a slight gain of gold, nearly 3 millions, contrary to what bimetallic law would have led to expect. The correspondence, however--a simultaneity--of the two movements, of import of silver and export of gold, is strongly marked in the years 1834-39 and 1841-48, and the failure of correspondence of the totals is to be explained by the statistics of French foreign trade balances during the years named.

With the year 1852, the decisive change in the ratio sets in with the new gold influx. The ratio rises above the 15.5 of the French law, and the profit on the importation and coining of silver vanishes. Its place is taken by a corresponding profit on the importation and coinage of gold. The fourteen years during which the ratio remained above the legal 15-1/2 witnessed the importation into France of a total net (or balance) of gold to the amount of 135 millions sterling, and a total net or balance of exportation of silver of 66-2/3 millions sterling. The coincidence of actual fluctuation will best be seen by the graphic representation of it in the table. With 1865 the final and, so far as the nineteenth century is concerned, the fatal change of the commercial ratio sets in. It sinks persistently and increasingly below the legal 15-1/2, in face and spite of the united mintings of the Latin Union, and at once the premium on the importation and coinage of gold changes into one on silver. From 1865 to 1875, one year before the abandonment of the coinage of the 5-franc piece and the consequent relinquishment by France of the bimetallic system, her net imports of silver amounted to 56 millions sterling.

As far as these figures of import and export are concerned, they show only the _final_ results of the action of bimetallic law. The metal on whose importation and minting a premium was obtainable _was_ imported, and in large quant.i.ties. That is the single fact standing out in large.

The reciprocal fact--of a corresponding export of the metal over whose head the premium offered--does not emerge so distinctly, simply by reason of the complication of the subject of exports of metals with the wider general movement of trade balances. It also is, however, distinctly perceptible and demonstrable. But this is to speak only in large and of final results. What the intermediate course of events--of see-saw and flux, was, can only be adequately grasped from the records of the mintings, conjoined with the records of net import or export of the two metals.

TABLE OF THE NET IMPORTS OR EXPORTS OF GOLD IN FRANCE UNDER THE BIMETALLIC LAW, 1822-75.

+------+------------+------------++------+-------------+-------------+ | | Net | Net || | Net | Net | | Year.| Import | Export || Year.| Import | Export | | | (Francs). | (Francs). || | (Francs). | (Francs). | +------+------------+------------++------+-------------+-------------+ | 1822 | 4,000,000 | ... || 1852 | 17,000,000 | ... | | 1823 | ... | 19,000,000 || 1853 | 289,000,000 | ... | | 1824 | 37,000,000 | ... || 1854 | 416,000,000 | ... | | 1830 | 10,000,000 | ... || 1855 | 218,000,000 | ... | | 1831 | 10,000,000 | ... || 1856 | 375,000,000 | ... | | 1832 | ... | 39,000,000 || 1857 | 446,000,000 | ... | | 1833 | 24,000,000 | ... || 1858 | 488,000,000 | ... | | 1834 | ... | 7,000,000 || 1859 | 539,000,000 | ... | | 1835 | ... | 20,000,000 || 1860 | 311,000,000 | ... | | 1836 | ... | 14,000,000 || 1861 | ... | 24,000,000 | | 1837 | ... | 6,000,000 || 1862 | 165,000,000 | ... | | 1838 | ... | 4,000,000 || 1863 | 12,000,000 | ... | | 1839 | 24,000,000 | ... || 1864 | 125,000,000 | ... | | 1840 | 49,000,000 | ... || 1865 | 150,000,000 | ... | | 1841 | ... | 5,000,000 || 1866 | 465,000,000 | ... | | 1842 | ... | 12,000,000 || 1867 | 409,000,000 | ... | | 1843 | ... | 41,000,000 || 1868 | 212,000,000 | ... | | 1844 | ... | 6,000,000 || 1869 | 275,000,000 | ... | | 1845 | ... | 14,000,000 || 1870 | 119,000,000 | ... | | 1846 | ... | 9,000,000 || 1871 | ... | 214,000,000 | | 1847 | ... | 13,000,000 || 1872 | ... | 53,000,000 | | 1848 | 38,000,000 | ... || 1873 | ... | 108,000,000 | | 1849 | 6,000,000 | ... || 1874 | 431,000,000 | ... | | 1850 | 17,000,000 | ... || 1875 | 454,000,000 | ... | | 1851 | 85,000,000 | ... || | ... | ... | +------+------------+------------++------+-------------+-------------+

TABLE OF THE MOVEMENT OF SILVER DURING THE SAME PERIOD.

+------+-------------+-----------++------+-------------+-------------+ | | Net | Net || | Net | Net | | Year.| Import | Export || Year.| Import | Export | | | (Francs). | (Francs). || | (Francs). | (Francs). | +------+-------------+-----------++------+-------------+-------------+ | 1822 | 125,000,000 | ... || 1852 | ... | 3,000,000 | | 1823 | 114,000,000 | ... || 1853 | ... | 117,000,000 | | 1824 | 124,000,000 | ... || 1854 | ... | 164,000,000 | | 1830 | 151,000,000 | ... || 1855 | ... | 197,000,000 | | 1831 | 181,000,000 | ... || 1856 | ... | 284,000,000 | | 1832 | 60,000,000 | ... || 1857 | ... | 360,000,000 | | 1833 | 75,000,000 | ... || 1858 | ... | 15,000,000 | | 1834 | 101,000,000 | ... || 1859 | ... | 171,000,000 | | 1835 | 74,000,000 | ... || 1860 | ... | 157,000,000 | | 1836 | 27,000,000 | ... || 1861 | ... | 62,000,000 | | 1837 | 144,000,000 | ... || 1862 | ... | 86,000,000 | | 1838 | 120,000,000 | ... || 1863 | ... | 68,000,000 | | 1839 | 75,000,000 | ... || 1864 | ... | 42,000,000 | | 1840 | 96,000,000 | ... || 1865 | 72,000,000 | ... | | 1841 | 117,000,000 | ... || 1866 | 45,000,000 | ... | | 1842 | 92,000,000 | ... || 1867 | 189,000,000 | ... | | 1843 | 103,000,000 | ... || 1868 | 109,000,000 | ... | | 1844 | 82,000,000 | ... || 1869 | 112,000,000 | ... | | 1845 | 90,000,000 | ... || 1870 | 35,000,000 | ... | | 1846 | 47,000,000 | ... || 1871 | 15,000,000 | ... | | 1847 | 53,000,000 | ... || 1872 | 102,000,000 | ... | | 1848 | 214,000,000 | ... || 1873 | 181,000,000 | ... | | 1849 | 244,000,000 | ... || 1874 | 360,000,000 | ... | | 1850 | 73,000,000 | ... || 1875 | 194,000,000 | ... | | 1851 | 78,000,000 | ... || | | | +------+-------------+-----------++------+-------------+-------------+

TABLE OF THE COINAGE OF GOLD IN FRANCE, 1803-75, DURING THE BIMETALLIC ReGIME.

+------+-------------+-------------++------+-------------+-------------+ | | | || | | | | Year.| Gold | Silver || Year.| Gold | Silver | | | (Francs). | (Francs). || | (Francs). | (Francs). | +------+-------------+-------------++------+-------------+-------------+ | 1803 | 10,209,840 | 23,171,988 || 1810 | 46,070,600 | 57,170,216 | | 1804 | 38,463,980 | 47,517,195 || 1811 | 132,135,740 | 256,399,040 | | 1805 | 20,474,500 | 46,385,909 || 1812 | 97,717,880 | 160,786,409 | | 1806 | 38,533,760 | 25,241,651 || 1813 | 62,659,680 | 134,900,313 | | 1807 | 18,019,920 | 5,008,903 || 1814 | 64,544,720 | 61,244,121 | | 1808 | 32,311,260 | 67,833,922 || 1815 | 55,379,840 | 37,673,806 | | 1809 | 15,206,440 | 44,296,494 || 1816 | 15,151,280 | 34,917,526 | +------+-------------+-------------++------+-------------+-------------+

TABLE OF THE COINAGE OF GOLD IN FRANCE, 1803-75, DURING THE BIMETALLIC ReGIME--_continued_.

+------+-------------+-------------++------+-------------+-------------+ | | | || | | | | Year.| Gold | Silver || Year.| Gold | Silver | | | (Francs). | (Francs). || | (Francs). | (Francs). | +------+-------------+-------------++------+-------------+-------------+ | 1817 | 52,197,080 | 37,143,579 || 1847 | 7,706,020 | 78,285,157 | | 1818 | 95,410,460 | 12,406,076 || 1848 | 39,697,740 | 119,731,095 | | 1819 | 52,410,660 | 21,235,077 || 1849 | 27,109,560 | 206,548,663 | | 1820 | 28,781,080 | 18,436,620 || 1850 | 85,192,390 | 86,458,485 | | 1821 | 404,140 | 67,533,866 || 1851 | 269,709,570 | 59,327,308 | | 1822 | 4,718,100 | 100,679,137 || 1852 | 27,028,270 | 71,918,445 | | 1823 | 408,180 | 82,911,680 || 1853 | 312,964,020 | 20,099,488 | | 1824 | 7,071,700 | 114,476,007 || 1854 | 526,528,200 | 2,123,887 | | 1825 | 45,616,360 | 75,203,291 || 1855 | 447,427,820 | 25,500,305 | | 1826 | 925,540 | 90,835,623 || 1856 | 508,281,995 | 54,422,214 | | 1827 | 3,160,940 | 153,868,978 || 1857 | 572,561,225 | 3,809,611 | | 1828 | 8,025,740 | 161,466,133 || 1858 | 488,689,635 | 8,663,568 | | 1829 | 1,118,180 | 102,642,617 || 1859 | 702,697,790 | 8,401,813 | | 1830 | 23,516,640 | 120,187,089 || 1860 | 428,452,425 | 8,034,198 | | 1831 | 49,641,380 | 205,223,764 || 1861 | 98,216,400 | 2,518,049 | | 1832 | 2,046,260 | 141,353,915 || 1862 | 214,241,990 | 2,519,397 | | 1833 | 16,799,780 | 157,482,863 || 1863 | 210,230,640 | 329,610 | | 1834 | 30,231,200 | 218,288,304 || 1864 | 273,843,765 | 7,296,609 | | 1835 | 4,550,060 | 99,966,149 || 1865 | 161,886,835 | 9,222,394 | | 1836 | 5,097,040 | 43,242,399 || 1866 | 365,082,925 | 44,821,409 | | 1837 | 2,026,740 | 111,858,697 || 1867 | 198,579,510 | 113,758,539 | | 1838 | 4,940,140 | 88,489,324 || 1868 | 340,076,685 | 129,445,268 | | 1839 | 20,670,000 | 73,637,742 || 1869 | 34,186,190 | 68,175,897 | | 1840 | 40,998,240 | 63,795,527 || 1870 | 55,394,800 | 69,051,256 | | 1841 | 12,375,060 | 77,517,941 || 1871 | 50,169,880 | 23,878,499 | | 1842 | 1,852,720 | 68,391,170 || 1872 | -- | 26,838,369 | | 1843 | 2,826,600 | 74,148,998 || 1873 | -- | 156,270,160 | | 1844 | 2,742,260 | 69,134,980 || 1874 | 24,319,700 | 60,609,988 | | 1845 | 119,140 | 89,967,609 || 1875 | 234,912,000 | 75,000,000 | | 1846 | 2,086,420 | 47,886,145 || | | | +------+-------------+-------------++------+-------------+-------------+

During the years 1820-50, when the ratio remained below the legal 15-1/2 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 favour of gold, the total gold coinage reached 292,416,951, while the total silver coinage was scarcely more than 1-1/4 millions (1,315,532).

At the beginning of this second period, 1851, the Bank of France held in its reserves approximately only 3-1/2 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 millions sterling of gold against nearly 5-1/2 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.

+------+--------+--------+-----------++------+--------+--------+-----------+ | | Gold | Silver | Percent || | Gold | Silver | Percent | | Year.|(Million|(Million| of Silver || Year.|(Million|(Million| of Silver | | |Francs).|Francs).| to Total. || |Francs).|Francs).| to Total. | +------+--------+--------+-----------++------+--------+--------+-----------+ | 1851 | 83 | 478 | 85 || 1864 | 273 | 94 | 27 | | 1852 | 69 | 442 | 86 || 1865 | 238 | 208 | 44 | | 1853 | 102 | 214 | 67 || 1866 | 576 | 136 | 19 | | 1854 | 301 | 193 | 39 || 1867 | 697 | 318 | 31 | | 1855 | 72 | 147 | 66 || 1868 | 662 | 474 | 42 | | 1856 | 94 | 104 | 53 || 1869 | 461 | 798 | 63 | | 1857 | 110 | 126 | 52 || 1870 | 429 | 69 | 14 | | 1858 | 294 | 260 | 47 || 1871 | 554 | 80 | 13 | | 1859 | 250 | 329 | 56 || 1872 | 656 | 134 | 17 | | 1860 | 144 | 272 | 65 || 1873 | 611 | 148 | 19 | | 1861 | 225 | 100 | 30 || 1874 | 1013 | 314 | 24 | | 1862 | 187 | 108 | 36 || 1875 | 1168 | 504 | 30 | | 1863 | 119 | 72 | 37 || 1876 | 1349 | 540 | 28-1/2 | +------+--------+--------+-----------++------+--------+--------+-----------+

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 regime, the ebbing and flowing experience which has throughout been instanced as the chief characteristic of such regime 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 15-1/2 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.

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 quant.i.ty 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 circ.u.mstances, too long to enumerate, the needs of the extreme East had grown in unusual proportions, and as silver is alone in favour there, it was exported in enormous ma.s.ses. 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 labours are summed up in the report of M. 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 obstruction 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 counselled 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 recognising that in so doing the monetary unity of silver, characteristic of our system, would be thereby broken, at anyrate for its circulating form; for while the franc no longer existed in law, the 5-franc was disappearing 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 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 defence against, a bimetallic system. If silver had not fallen in 1871 the Latin Union would still be the bulwark of defence of bimetallic France against the action of bimetallic law.

[Sidenote: THE LATIN UNION]

The formation of the Latin Union, therefore, was a measure of defence 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 unit was fixed at the silver franc of 5 grms.

weight, and 9 fineness. For years Belgium endeavoured 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 to 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 piece, 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 30th April 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 all 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 23rd December 1865.

This convention, which inst.i.tuted the Latin Union, came into force on the 17th of August 1869; and under it one slight change was made in the internal currency system of France. The hitherto full-valued silver coinage from 2 francs downwards 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 ident.i.ty 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 form, and of silver into 5-franc pieces; and 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 defence against the sapping of the small coinage which had previously been experienced. According to this clause the maximum of mintings for national or currency purposes was presented thus--

Francs.

For Belgium 32,000,000 France 239,000,000 Italy 141,000,000 Switzerland 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 pa.s.sing 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--

1874. 1875. 1876.

Belgium 12,000,000 15,000,000 10,800,000 France 60,000,000 75,000,000 54,000,000 Italy 60,000,000 50,000,000 36,000,000 Switzerland 8,000,000 10,000,000 7,200,000 Greece (which had acceded to the Union in 1868) 12,000,000

Of these states Switzerland alone did not coin up to her total, and at the conference in February 1876 her delegates pressed strongly for the entire cessation of the coinage of the 5-franc piece, and for the adoption of a gold standard. In this she was strongly opposed by Italy.

The latter state, on account of the disappearance of her metallic currency before the inconvertible paper, had no interest in the limitation of the mintings of the Union. In the conference of 1874 she even sought and was authorised to coin beyond the quota accorded her, by a sum of not less than 800,000 in 5-franc pieces, on condition that such amount should be deposited as a metallic reserve of the Bank of Italy.

The force of circ.u.mstances, however, soon broke down even this policy of limitation. In the course of 1876 the fall of silver became more disastrously p.r.o.nounced. In addition, it was no secret that the amounts accorded by the conferences of 1874-75-76 for the mintings of each state, had been a.s.signed as maximum, not minimum limits, under the Latin Union.[16]

The next Mint convention of November 1878 would determine the Latin Union on the 31st December 1885, if not prolonged by further treaty. As the time approached the smaller states, such as Belgium, which had committed themselves to a large minting and thereby to the liability of having to liquidate or take back its own mintings--such 5-franc pieces as happened to be beyond its frontiers--at full value, in the face of a greatly fallen silver market, shrank from the responsibility, and sought and obtained a prolongation of the _status quo_ until the end of 1891, and thenceforward by yearly agreement.

Finding that individuals treated the agreed amounts of mintings as a minimum limit, the French Government resolved to suspend the minting of the 5-franc pieces entirely. Accordingly, on the 21st March 1876, M.

Leon Say, Minister of Finance, submitted to the Senate a Bill to that effect. It was followed, eight days later, by a proposition of a law suspending the emission of "_bons_" for the coining of silver money 9/10 fine. The _expose des motifs_ of this Act is most remarkable:--

"The events which have happened for some time past in the relations of the precious metals have brought to a head the monetary question amongst us, although from 1815 Great Britain has laid down principles which have attracted round her an ever-increasing circle of nations.

"The theory of the double standard, on which our monetary law of the year XI. reposes, has been called in question ever since its origin.

"It is, to our conception, less a theory than the result of the primitive inability of the legislators to combine together the two precious metals otherwise than by way of an unlimited concurrence--metals, both of which are destined to enter into the monetary system, but which recent legislators have learned to co-ordinate by leaving the unlimited function to gold alone and reducing silver to the role of divisional money. From 1857 the French Government has studied the question, and it may be stated that since that date the principle of the gold standard has won increasing favour through our several administrations."

Then follows an account of the monetary history of France during the period, as in brief resume already given. "If," the preamble continues, "from 1874, certain precautions had not been taken to arrest the effects of that grave perturbation in the ratio, France and her monetary allies would have seen their monetary circulation invaded by silver and correspondingly drained of gold." Hence the conventions of 1874-75-76, limiting the mintings of the members of the Latin Union, although, "according to us, the fall of silver in 1875 prescribed a complete cessation even for that year rather than a simple limitation."

Germany.

Until the unification of Germany in our own days, and the adoption of the present imperial currency system, German monetary history reproduces perpetually all the elements of that mediaeval system, bimetallic in fact though not theoretically so conceived, which England flung away in 1816, and from the toils of which France has not as yet completely emerged.