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 factorin 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 ofdrain 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 goldstandard—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 instituted 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 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 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 thisclause the maximum of mintings for national or currency purposes was presented thus—
Francs.For Belgium32,000,000France239,000,000Italy141,000,000Switzerland17,000,000
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—
1874.1875.1876.Belgium12,000,00015,000,00010,800,000France60,000,00075,000,00054,000,000Italy60,000,00050,000,00036,000,000Switzerland8,000,00010,000,0007,200,000Greece (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 wasstrongly 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 circumstances, however, soon broke down even this policy of limitation. In the course of 1876 the fall of silver became more disastrously pronounced. 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 assigned 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, inthe face of a greatly fallen silver market, shrank from the responsibility, and sought and obtained a prolongation of thestatus quountil 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. Léon 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 money9⁄10fine. Theexposé des motifsof 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 yearXI.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 goldalone and reducing silver to the rôle 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 résumé 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."
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 mediæval 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.
As safeguards against the evils of that system which she had felt with such bitter experience, andwhich had culminated in the crisis closing the Thirty Years' War, Germany could only feebly employ the mechanism of ineffectual Mint conventions. For a century she persevered in the effort to establish a common standard and Mint system, but in vain. The attempt had to be abandoned, and the reeling system left to its own process of disintegration; and when at last the events of 1871 came to give her unity in her coinage, as well as political life, there were not less than nine distinct and independent coinage systems in existence.
Hardly had the crisis of the Thirty Years' War passed out of mind before again the currency system had begun to work its baneful effects.
GERMANY: THE ZINNAISCHE STANDARD
In 1665 complaints were loudly made of the corrupt and debased state of the coin, due to export and culling. There is, indeed, quite a literature of these same complaints. The language of theReichstattisches conclusum(Ratisbon, 12th September 1666) expressly attributes this export to the higher value set upon the gold in foreign countries, especially Venice. And the statement of the warden of the Mint of the three corresponding circles—Franconia, Bavaria, andSwabia—delivered in hisGutachtenof the preceding May, was that the place of these good German ducats had been taken by very depreciated coins of Italy, France, England, and Holland. The three higher circles, accordingly—Franconia, Bavaria, and Swabia—met in conference and determined on a thorough investigation. The advice submitted tothem was to raise the thaler from 90 to 96-kreutzer (see account of German coinage,Appendix V.), implying a lowering of the ratio from 15 to 141⁄8. This proposed scheme was accepted,in comitia, in 1667, the fifth article of the resolution specially mentioning the infliction of numerous intruding base foreign divisional money. From this scheme Brandenburg and Saxony held off, maintaining that the ratio had not been sufficiently lowered, considering the condition of the production of gold; and, in the same year, by a Mint treaty between Frederick William of Brandenburg and the Elector of Saxony, the so-calledZinnaischestandard was adopted for those two states. According to this standard, the Reichs thaler was raised to 105-kreutzer (1 florin 45 kreutzers) and a ratio of 135⁄9was established.
The result of this action of Saxony and Brandenburg was to strip the three higher circles of their silver, and in two years (1669) they anxiously met again to consider the question, not only of the foreign base coin everywhere prevalent, but also of the damaging exchange "and ceaseless melting down and exchange of proper coin from the circles."
By a strenuous effort the three circles carried through the Reichstag of 1680 their resolution to reduce the Reichs thaler to 90 kreutzer (ratio 151⁄4). From this decision the Emperor stood apart, with Bavaria and Salzburg, in putting the Reichs thaler at 96 kreutzer.
In view of such contrariety the impossibilityof any general régime for the empire became apparent, and further attempts at it were practically abandoned. It was the perception by the mercantile community, as well as by the various Governments, of the consequences of such disorder, that led to the establishment of the so-called Leipzig standard in 1690. This standard was promoted by John GeorgeIII.of Saxony, and established by treaty between Saxony, Brandenburg, and Brunswick-Luneburg. According to it the Reichs thaler was raised to 120 kreutzers, or 2 florins, the mark being minted into 12 thalers or 18 guldens.
The result of the introduction of this standard was that in a few years the raising of the Reichs thaler to 120 kreutzers prevailed all over the empire. Sweden accepted it in the same year, 1690, and three years later the three upper circles acquiesced. At the same time the gold gulden was advanced to 2 florins 56 kreutzers. The previous ratio of 15 was thereby advanced to 15.1 (15128⁄1278).
In 1738 the Reichstag determined on the adoption of the Leipzig standard for the whole empire; no alteration was made in the Reichs thaler, which was still retained at 2 florins and minted at 12 to the mark fine; but a graduated scale of agio was adopted for the divisional coins, which were minted at an equivalence of from 123⁄8to 132⁄3thalers to the mark fine. The difference (varying from3⁄8to 12⁄3thalers) represented the agio.
GERMANY: THE CONVENTION STANDARD
From the first, however, the Leipzig standardhad no more real success than any of its predecessors. Although theoretically accepted by all North Germany, and adopted in the Reichstag in 1738, it could obtain no actual general adoption through the empire. Even from the moment of the inception of the system in 1690, the process of competitively raising the course of the coinage had still continued, and pieces of 30, 20, 15, and 10-kreutzers were struck on a basis of from 20 to 211⁄3gulden to the mark. The result was to put upon thecarolus, which from 1730 onwards was minted in great quantities in South-West Germany, an agio of 10 per cent., a differentiation which was much increased by the disorders of the war of the Austrian succession. Such an agio swiftly drove the larger, full-valued specie out of currency, and during the continuance of that war the currency of Austria and South Germany was almost entirely reduced to depreciated fractional pieces, while the exchangers reaped untold advantage. It was on the close of this war, in 1748, that, with characteristic Austrian selfishness, though also with a boldness none of his predecessors had approached, the Emperor, FrancisI., determined on the erection of the 20-gulden standard as a separate Austrian independent system, minting the mark of fine silver into 131⁄2Reichs thalers, or 20 guldens. This latter system, after the accession to it of Bavaria, obtained the name of the Convention Standard, and the 2-gulden pieces minted under it are styled the Species or Convention Thaler. The convention system remainedin force in Austria until the Vienna Coinage Convention of 1857, a period during which theConvention Thalerfound wide circulation through South Germany.
The currency was eked out by the Austrian gold ducats and by vast quantities of foreign silver, French6-livre thalers(current for 2 florins 48 kreutzers) and thecrownorBrabant thaler(current for 2 florins 42 kreutzers). From 1807 onwards this latter coin was imitated by the South German States, Bavaria especially, in theircrown thaler, minted on a fresh basis of 241⁄2guldens to the mark of fine silver.
The selfish initiative of Austria was followed by Prussia and the South German States. The latter, the Rhenish and South German States, adopted in 1761-65 the 24-gulden; subsequently changed into the 241⁄2-gulden standard (seeAppendix VI.). The overvaluation of theKronthaler, which led to that latest development from a 24 to a 241⁄2-gulden standard, was the result of the immense circulation of French 6-livre pieces (known in Germany asLaubthalers) in South-West Germany. Graumann quite discredits the theory that the overswimming of South Germany by these French pieces, with all the confusion in the currency which resulted, was due to the wars and the progress of French arms, and directly attributes it to the depreciation of the French specie, and to their quite deliberate departure from the standard of French coinage as fixed in 1726.
SOUTH GERMAN AND PRUSSIAN SYSTEMS
In Prussia the reform of the coinage system wasundertaken by her first King, FrederickI., father of Frederick the Great. In 1750 the latter adopted the 14-thaler or 21-gulden standard, subdividing the thaler into 24 groschens of 12 pfennige each. The measure was undertaken expressly to stop the export of gold which was going on. The adoption of a standard lower than the Convention standard effectually prevented the outflow of Prussian money, and it was not until the beginning of the present century, through the new Mint confusion which arose from the French Revolution, that Prussian money spread into Saxony, Hanover, Hesse, and even into the south-west. The second idea of Frederick's reform was to buy gold cheap, but in this it did not succeed. The intention was to obtain for five Prussian thalers the goldpistoles, which were purchasable for five convention thalers. This rate, however, never prevailed in the market, as from the first thepistolewas valued at 51⁄4Prussian thalers. During the Seven Years War, when Frederick was driven to a depreciation of his coinage, his system went to pieces. But an active reform was undertaken upon the conclusion of the peace of Hubertsburg, 1763. The 14-thaler system was re-established, although, as far as the smaller divisional silver coinage was concerned, the depreciation, in which Frederick had been imitated by the pettier states round him, continued into the present century.
In 1821 a minor alteration was made in the Prussian system, by subdividing the thaler into 30instead of as previously 24 groschen, the former being distinguished from the latter by the title ofsilver groschen. To this Prussian or 14-thaler system Saxony acceded, as did also, in 1848, Mecklenburg and Oldenburg, with many minor differences of detail,—Saxony, for example, dividing the silver groschen into 10 pfennige; Mecklenburg dividing the thaler into 48 schillings of 12 pfennige each; and Oldenburg dividing it into 72 grotens of 5 schwarens each. The gold coin was supplied by the Prussian and Hanoverian 5 and 10-thaler pieces, the Friedrichsd'or, a favourite trade coin even in South Germany, and by Spanishpistolescirculating at an equivalence of 4 6-livre thalers.
CONFERENCE OF MUNICH, 1837
The confusion of these various German systems was further increased by the uncertainty and difference which had come to prevail in the unit of weight. In Austria alone there were 2 marks in use, the Vienna mark (= 288.644 grs.), and the Cologne mark (= 243.870 grs.). While in North Germany, and subsequently in the south-west, the Prussian mark (= 233.855 grs.) prevailed. It was as the outcome of a desire to remedy at once the evil condition and confusion of the currency, and the uncertainty as to weight standard, which led to the conference of Munich on 25th August 1837. At that conference, Bavaria, Würtemberg, Baden, Hesse, Darmstadt, and the Free State of Frankfort, adopted the 241⁄2-gulden standard as the standard for their several states. At the same time the Prussian mark(233.855 grms. = half the Prussian pound), was established as the Mint mark for the contracting members. For the divisional coinage (6 and 3-kreutzer pieces) a standard of 27 guldens to the mark was adopted, the details of the various fractional pieces being left to the different states. To this convention Hesse, Hamburg, and the two Hohenzollerns acceded in the following years.
This movement of South Germany gave a new impetus to the idea of Mint unification, and led to the General Mint Convention of the States of the Zollverein, agreed upon in full assembly of delegates at Dresden, 30th July 1838, and ratified also at Dresden on the 7th January 1839. The Dresden Convention was practically the first renewed attempt at Mint unification which Germany had seen since 1738. The contracting members to this general Mint convention were Prussia, Bavaria, Saxony, Würtemburg, Baden, Hesse, Saxe-Weimar, Eisenach, Saxe-Meiningen, Saxe-Altenburg, Saxe-Coburg and Gotha, Nassau, Schwarzburg-Rudolstadt, Schwarzburg-Sondershausen, Reuss, Reuss-Schleiz, Reuss-Lobenstein, Ebersdorf, and Frankfurt.
Briefly, the articles of the convention were as follow:——
"1. The Mint mark of all these contracting states of the Customs Union shall be the Prussian Mint mark = 233.855 grms.
"2. On this common weight standard the coinages of the contracting states shall be in accordance withthe two systems in existence among the said states, viz. by thalers and groschen, according to the 14-thaler (or Prussian) system; or by gulden and kreutzer, according to the 241⁄2-gulden (or South German) standard. For the purpose of assimilation or equivalating, the thaler to be reckoned = 13⁄4-gulden, and the gulden =4⁄7-thaler.
"3. The 14-thaler system to be that of Prussian Saxony, Hesse, Saxony, and Saxe-Altenburg, Saxe-Coburg and Gotha (Gotha),Schwarzburg-Rudolstadt (Unterherrschaft), Schwarzburg-Sondershausen, and Reuss; the 241⁄2-gulden system to prevail in Bavaria, Würtemberg, Baden, Hesse, Saxe-Meiningen, Saxe-Coburg and Gotha (Coburg), Nassau, Schwarzburg-Rudolstadt (Oberherrschaft), and the Free State of Frankfurt.
"4. Each state will confine its mintings to such pieces as prevail in the system of which it forms part.
"5. In larger specie, and also in divisional coin, each state to bind itself to exercise the greatest care to preserve the standard and weight.
"7. For the purpose of the commerce of the contracting statesunionorconventioncoins (vereinsmünze) shall be minted seven to the mark of fine silver, at an equivalence of 2 thalers or 31⁄2guldens, fully tenderable throughout the Union.
"8. Alloy to be .9 silver, .1 copper; so that 63⁄10pieces = 1 Mint mark in weight; remedy = .003.
THE DRESDEN CONVENTION, 1838
"9. From 1st January 1839 to 1842, at least 2,000,000 of thesevereinsmünzeto be coined, one-thirdvalue except part each year, and by the various statespro rataof their population. From 1842 onwards, in case of no new treaty, the rate of minting to be two millionsvereinsmünzeevery four years,pro rataas before; each state to give an account of its mintings.
"10. Also of their separate trials of standard and weight.
"11, 13. None of the contracting states to set its particular internal specie at any different on a three months' notice, and to renew its currency at face value in case of depreciation.
"12. The states bind themselves not to issue divisional coins in excess of suchpro ratarequirements as above.
"14. For the divisional coinage the standard of the convention of Munich, 1837 (viz. 27 gulden), is adopted.
"18. The treaty to endure till the end of 1858. States intending to retire then to give two years' notice. From that date, if not discarded, the treaty to be periodically renewed (five-yearly)."
This treaty continued in force nominally until the later and still more famous convention of Vienna in 1857, before which date Hanover, Brunswick, and Oldenburg had also given in their adherence to it.
At the time of the Mint Conference and Convention of Vienna, therefore, there were, broadly speaking, three competing systems in Germany, viz. of Austria, Prussia, and South Germany or Bavaria.
One aspect of this latter conference of 1857, viz.its deliberations with regard to gold coinage, will be referred to separately. As far as relates to its attempted systematisation of these three German currencies the agreement took the following form:—
1. The pound of 500 grammes decimally subdivided, to be used as the basis of the coinage.
2. The competing systems to be assimilated to this basis by the following regulation:—
The thaler (or Prussian) standard of 30 thalers to the pound of silver to take the place of the 14-thaler standard, and to prevail in Prussia, Saxony, Hanover, Hesse, and a string of minor states.
The Austrian standard to be on the basis of 45 guldens out of a pound of fine silver, and to prevail in the Empire of Austria and the principality of Lichtenstein.
The South German standard to be on the basis of 521⁄2-gulden to the pound of silver (instead of the 241⁄2-florin standard formerly used), and to prevail in Bavaria, Würtemburg, Baden, Hesse, Frankfurt, and a few other places of South Germany.
The equivalence of the systems was to be—
One-thaler convention piece (1⁄30pound) = 11⁄2florins in Austrian currency = 13⁄4florin in South German currency.
All the coins to be of unlimited validity in all the states, divisional coinage to be of a lighter standard than the coinage standard of the country, but lighter only within limits fixed. The tender of these latter to be limited to 20-thaler or 40-gulden.
THE VIENNA CONFERENCE, 1857
The regulations adopted by this Vienna Convention as to the gold coinage are very significant, and deserve special note.
The advance in the gold price of silver, due to the Californian and San Franciscan gold finds, acted on the silver-using countries. As soon as the price of bar silver exceeded 607⁄8-pence per standard oz., there resulted a melting down and export of the silver, in the countries which had adopted bimetallism at the 151⁄2-ratio.
It was this experience in France, and the allied group of countries, which led to the formation of the Latin Union in 1865. In mere point of date, that union had been preceded by the Vienna Conference and Convention by a matter of eight years. And as far as the regulations of this latter relating to gold coinage are concerned, there is evidence that the bimetallic action of France had driven Germany to her union of 1857, as a mere matter of self-defence, just as it later drove the Latin states to their union of 1865. In both cases the underlying motive was a wish to protect that part of their currency system which was threatened by bimetallic law. The premium on gold, on its minting,i.e.the profit to be made on minting it at 151⁄2in France, while its market value was considerably less in Germany and elsewhere, drew the gold to France. It is a mistake to think that France attracted gold simply from California and Australia. She attracted it by the action of bimetallic law from her neighbour Germany,and replaced it by 5-franc silver mintings. The circulation of French 5-franc pieces was so extensive in South Germany, in the period preceding the Vienna Convention, that the cash reserve of the Frankfort bank was at one moment composed almost entirely of them.
The manner in which the Vienna Convention met the difficulty has the appearance of plausibility, though it proved in the end ineffectual. It determined not to establish a fixed ratio but to follow the market price of gold, apparently in the hope of attracting a natural or market supply.
"For the purpose of further facilitating mutual transactions, and for the promotion of trade with neighbouring countries, the contracting powers may coin convention trade coins in gold, under the namescrown, andhalf-crown.
"1. The crown =1⁄50of a pound of fine silver.
"2. The half-crown =1⁄100.
"The contracting powers may not coin any other gold piece, except Austria, which retains the right of coiningducatsof the present value, to the end of 1865.
"The silver value of the convention gold coins in ordinary intercourse is entirely fixed by the relation of the supply to the demand. They must not, therefore, be considered as a medium of payment of the same nature as the legal silver currency of the country, and no one is legally bound to receive them as such.
THE VIENNA CONVENTION, 1857
"Each state is at liberty to permit convention goldcoins to be paid into their offices instead of silver, according to a previously settled fixed rate, and to extend this permission either to all transactions and offices, or only to some. Such previous settlement of the rate is, however, never to last more than six months, and must at the expiration of the last month always be renewed for the following official treasury period of exchange. The rate cannot be fixed at a higher value than that given to such coinage by the average of the official commercial rate of exchange during the previous six months. Each government also reserves to itself the right to alter the rate at any time within the period fixed, and to suspend it when it thinks proper.
"A treasury rate of exchange shall henceforth only be fixed for convention gold coins, and not for other kinds of coined gold.
"The widest circulation to be given to the notices by which the official rate of exchange is fixed. They must be published beforehand, even when a change in rate for the next fixed period is not intended, and must contain—
"1. The statement of the average trade exchange at the principal places of exchange, during the six months immediately preceding.
"2. The treasury rate fixed accordingly.
"3. The duration of the value of the same.
"4. The reservation to alter or recall this rate of exchange if necessary, even before the expiration of the term named.
"5. The declaration that such rate of exchange only affects payments to be made into offices of the state.
"In the countries of the contracting powers pay-offices of the State, as well as public institutions, banks, etc., shall not be allowed in future, in payments to be made by them, to make any proviso with regard to the medium of payment in silver or gold, in such a way that for the latter a certain fixed relative value should be expressed beforehand in silver money."
From the point of view of Austria, this convention had been entered upon with the desire of effecting a gradual adoption of gold coinage, together with a concurrent ceasing of the compulsory note circulation. The outcome of the conference was, however, in quite distinct opposition to this desire, as the agreement which was finally arrived at established the maintenance of a pure silver currency. The continuance of the goldcrownof 10-grs. fine gold was recognised only as a trade medium. This experiment of a trade gold coin failed completely, though it is none the less interesting intrinsically, as well as for its reflex bearing on the similar schemes which were proposed in the early years of the French Revolution. The premium on the minting of gold drew it to France, in preference to any other place where a simple market price prevailed. And the 20-franc gold pieces of France overflowed, while the German crowns could not struggle into existence.
GERMANY: ATTEMPTS AT REFORM, 1860-70
The attempt which was made by a commercial conference at Hamburg, at the time of the meeting of the Vienna Conference, to secure the introduction by the Hamburg Bank of a gold instead of a silvervaluta, remained equally ineffectual.
As far as concerns the establishment of a simple and single monetary system for Germany was concerned, this Vienna Convention, the last great convention which Germany saw previous to the reconstruction of her system in 1871, was as futile as that of Dresden in 1838, or as all the conventions of the seventeenth and eighteenth centuries previously.
The consciousness of the need of such simplification and unification, however, became thereby only the more apparent. Four years later the first German Handelstag, which met in May 1861 at Heidelberg, turned its first and special attention to the erection of some common currency system. The recommendation which it finally concluded upon was the adoption of theDrittelthaleras the unit mark, with a decimal subdivision. Four years later the third Handelstag, which met at Frankfort (September 1865), confirmed the resolution, with the additional proposition of the minting of a gold piece identical with the 20-franc piece, the value of which should be regulated from time to time; the scheme being, therefore, as before, that of a silver standard, with gold as trade money. The fourth Handelstag met at Berlin in October 1868, and again the matter was most seriously discussed.With the single exception of the Berlin members, all the deputies declared for the adoption of the gold standard. As, in the preceding year, Austria had withdrawn from the German Monetary Union of 1857, she no longer stood in the way of this proposition, and the erection of the North German Union distinctly favoured the project.
In June 1870 the Bundesrath of the North German Union resolved upon a reform and unification of the paper money, as preparatory to a complete currency reform, and in the same month the Chancellor of the North German Union had decided to call a Mint Convention. The outbreak of the Franco-German War immediately afterwards put a short stop to the proposal.
A long train of preparation had thus been laid, and there can be little doubt as to what the ultimate direction of German monetary legislation would have been, even without the war, and the consequent erection of the Empire. That the latter event, however, enormously facilitated the process cannot for a moment be questioned.
GERMANY: NEW IMPERIAL SYSTEM, 1871
When the subject was taken up after the Franco-German War, the determination to adopt a gold coinage was only gradually arrived at. In the original plan, as drafted soon after the conclusion of peace, the new gold coinage proposed was intended not to be tenderable, for the meantime, in private commerce. Such a provision roused all the opposition of the mercantile community, and in consequence of theagitation the scheme, as finally submitted to the Reichstag, was for a gold monometallic system. The law passed on the 4th December 1871, and the great operation of recoinage and conversion was immediately entered upon. It was greatly favoured by the ratio existing at the moment, and by the metallic condition of the world. The ratio taken as the basis of the computation was the French 15.5, accepted because of its long and present wide employment.
The previous silver standard thalers were taken as equivalent to 3 marks.
30 thaler = 90 mark = 1 pound fine silver.90 × 15.5 = 1395 marks.
30 thaler = 90 mark = 1 pound fine silver.90 × 15.5 = 1395 marks.
The gold piece of 10 marks was therefore coined at a tale of 1391⁄2to the pound of fine gold.
Propositions were made to the Reichstag that the 20-franc piece should be made equivalent to the English sovereign, or to the 25-franc piece, giving respectively a ratio of 15.17 or 15.31, but at the moment the price of silver in the London market ruled between 607⁄8and 603⁄4pence per ounce,i.e.at a mercantile ratio of 15.49-15.52. It was this fact which decided the adoption of the French ratio.
The chief Acts which have accomplished the reform are of dates 5th December 1871 and 9th July 1873, the first declaring the monetary system and the latter the law of tender.
The unit of the system is the mark, which is the1⁄1255.5 part of a pound of gold of 500 grammes at9⁄10fine, and is coined into pieces of 20 and 10 marks. The gold crown is a 10-mark piece, is9⁄10fine, and struck at a tale of 1391⁄2pieces to the German pound; charge for coinage, 3 marks per pound of fine gold.
The pound of fine silver is struck into 100 marks,9⁄10fine. The total amount of silver coin not to exceed 10 marks per head of population. No individual need accept more than 20 marks of imperial silver coin in payments. They are accepted in any amount by the Empire and by the Federal States.
All other German coins are no longer legal tender, and have been withdrawn, with the single exception of the thaler pieces. Whatever pieces of this kind still exist are legal tender to any amount, like the imperial gold coins, each being equal to 3 marks. An Act of 20th April 1870 provides thatVereinsthalerscoined in Austria before 1867 should also be full legal tender. An Act of 6th January 1876 has authorised the Bundesrath to put the thaler pieces and the AustrianVereinsthalerson the same footing as imperial silver coins,i.e.to make them legal tender only up to 20 marks, the thaler being still reckoned at 3 marks. Since the suspension of silver sales and of the withdrawal of the silver thalers (May 1879) there is no likelihood that the Bundesrath will make use of this authority conferred upon it.
In briefest résumé, the course of the silver coinage during the preceding century may be presented thus:—
GERMANY—COURSE OF THE 1-THALER PIECES.Thalers.Total minted during 1750-181664,380,936Withdrawn by the Government of the States27,788,956Withdrawn under the new Imperial System,1871-35,652,999""18746,319,170""18752,900,202""18762,582,123""18771,465,424""1878864,25347,573,127Leaving a balance not accounted for of16,807,809Thalers.Total minted during 1817-2224,261,735Withdrawn under the new Imperial System, 1871-33,623,511""18745,147,970""18752,580,580""18762,373,496""18771,421,719""1878766,90815,914,184Leaving a balance not accounted for of8,347,551Thalers.Total minted during 1823-185691,031,741Withdrawn under the new Imperial System, 187440,000""1875566,677""187611,250,277""18775,753,269""18784,640,06822,250,291Leaving a balance not accounted for of68,781,450Thalers.Total minted during 1857-71215,863,120Withdrawn by the Government of the States2,538Withdrawn under the new Imperial System,18753,000""187625,958""187764,806,347""187818,915,167109,635,938Leaving a balance not accounted for of106,177,182Thalers.On the whole period, 1750-1871, the total minted 1-thaler pieces amounted to395,537,532Total withdrawn195,423,540Leaving a balance not accounted for of200,113,992
GERMANY—COURSE OF THE 1-THALER PIECES.
Allowing 83,062,882 thalers as a rough equivalent for the loss by attrition, there is still a deficit of 117,051,000 thalers, or about £17,557,650 sterling to be accounted for (and laid to the account of remintings and loss by arbitrage).