1878.1879.Gold (dollars),82,500,000123,700,000Silver (dollars),...11,100,000Silver (small coin),53,600,00054,100,000Gold Certificates,44,400,00014,800,000Silver Certificates,...12,000,000State Notes,311,400,000327,700,000Notes of the National Banks,313,900,000330,000,000Totals,805,800,000862,600,000
In 1893—
Metallic.1893.Dollars.Gold bullion,84,631,966Silver bullion,128,479,587Gold coin,582,366,998Silver dollars,419,332,777Subsidiary silver coins,76,267,5861,291,078,914Paper.Legal tender notes (old issue),346,681,016Legal Tender Notes Act, 14th July 1890,153,160,151Gold certificates,77,487,769Silver certificates,334,584,504National Bank notes,208,538,844Currency certificates,39,085,0001,159,537,284
Of the total of silver dollars in the above, only a matter of 57,869,589 are in circulation. The balance, 361,463,188, are in the Treasury vaults.
THE NETHERLANDS IN 1816
During the eighteenth century the monetaryhistory of the Netherlands loses its central and determining importance. The details of the Mint laws, which precede the later developments of the nineteenth century, are therefore relegated to theAppendix (No. IV. Holland).
When the United Provinces of the Netherlands and Belgium were united under a single sceptre, both countries had an immense variety of coins, for formerly nearly every province claimed a right of coining money. To meet the desire for a simple and single system, a monetary law was passed in 1816 under King WilliamI.Its object was to arrive at a currency having the old florin, called the florin of 200as, as the unit. But at the same time a gold piece of 10 florins was allowed. The florin contained 9.63 grms. of silver and the 10-florin piece 6.056 grms. of gold. The ratio was therefore 15.873, whilst in France it was 151⁄2.
Moreover, to respond to the desire of the inhabitants of Belgium, the franc was accepted in the public treasuries, but at too high a rate, viz. at 471⁄2cents, whereas it was worth only 46.8 cents. The result was that the new 3-florin pieces on leaving the Brussels Mint went to the Lille Mint, to come back in the shape of 5-franc pieces.
The law was languidly carried out. Gold pieces were principally coined, and in proportion as gold was coined it became more and more difficult to coin silver.
In 1830 Belgium was separated from Holland, and it was not till 1844 that the recoining of the oldmoney was seriously undertaken. The monetary law had been already altered in 1839. Side by side with the worn silver coins there were issued 5 or 10-florin gold pieces, which had been coined to the amount of 1721⁄2millions of florins. The worn and clipped silver coins not being available for international transactions, gold formed the basis of exchange. This was regulated not by the florin but by1⁄10of the 10-florin gold piece. All difficulties it was thought could be obviated by adopting a florin of exactly 10 grms. weight, corresponding to the decimal metric system, and .945 fine. As long as the gold coins remained in circulation, and they were of great use while the recoinage was going on, there was thus a bimetallism with a ratio of 1:15.504. From 1842-49 more than 851⁄4millions of florins in nominal value were called in and were recoined in new silver pieces. The operation cost the State 8 millions of florins, 7 millions being the loss on the old coins.
Before actually commencing the recoinage, the question of standard had been carefully considered. Silver was resolved on. For more than a century and a half the florin had been the unit of all transactions. As the recoinage advanced, further attention was devoted to the necessity of instituting the single standard. By the law of 26th September 1847, the system of single silver standard was adopted. In June 1850 the gold coins were called in. A total of 50 millions, not one-third of what had beencoined, was offered by the public. It was sold in 1850-51 by the Government, which thereby lost rather more than 1 million.
HOLLAND IN 1872
There is a very noticeable point connected with this reform. The law of September 1847 admitted trade coins in gold by the side of the legal silver coins and fractional money. Besides the ducats, which are still in demand from time to time, there wereGuillaumes d'or,double-andhalf-Guillaumes. These pieces were inscribed only with the weight and fineness.
This system failed completely. Though the gold Guillaume was coined of the same weight and fineness as the old 10-florin piece, which was much in request, people would not have it. The uncertainty of its value made it unpopular. Between the years 1851 and 1853 only 10,000 Guillaumes, 10,000 half-Guillaumes, and 2636 double-Guillaumes were coined, and since 1853 not a single one has been coined.
All through the Californian and Australian gold finds and until 1872, the price of silver remained stationary for large transactions. Only in small transactions did it exhibit from time to time some slight fluctuations.
From 1847-72 everybody was invariably able to sell his silver to the Netherlands Bank at104 fl. 65 cents.Bank retained for recoinage, etc1 fl. 17 cents.105 fl. 82 cents.
which, equal to value of 1 kilogramme of silver, .945, was as by the Netherlands standard.
At Amsterdam also the price of silver did not change.
With the change in 1871 this repose was disturbed. A commission was thereupon appointed, in October 1872, to consider the situation, which reported in the following December. It proposed to prohibit the free minting of silver, and this was enacted by the law of 21st May 1873. As long as there was still a hope of Germany continuing her old system, the commission merely proposed to coin a gold piece side by side with the silver money. When, however, Germany adopted the gold standard, the commission, in its additional report of 26th June 1873, proposed to do the same by the introduction of a legal tender currency of 10- and 5-florin pieces in gold, and the withdrawal of the silver standard coins issued under the law of 1847. This measure did not meet the approval of the States-General. For the moment Holland had therefore no standard of value, the Mint being closed to silver, and gold being unrecognised. The consequent heavy fall in the exchange led to an agitation which resulted in the enactment of the law of 6th June 1875, which opened the Mint to the public for the coining of golden 10-guilder pieces of .9 fine, to be legal tender concurrently with the silver florins at the ratio of 1 to 15.625 (calculated on a quotation of 60.35 price per oz. of silver). The law was only enacted for a year, and in the following May 1876 anattempt was made to pass a bill for the introduction of an exclusive gold standard, and for the demonetisation of silver. The bill was rejected by the First Chamber, and the law of 1875 renewed for another year, and then (by the law of 9th December 1877) renewed "until otherwise determined upon by law."
The result was the permanence of the limping standard—a gold piece with free minting, side by side with silver pieces whose minting is restricted, but gold and silver pieces being alike of unlimited legal tender.
On the 28th March 1877 the States-General passed a law establishing, in the Dutch East Indies, the double standard on the same basis as in Holland,i.e.with the formal suspension of the further coinage of silver. This law was promulgated in Java on the 7th June 1877.
PORTUGAL IN 1868
The first law respecting gold in Portugal is dated 4th August 1688.
By that law the price to be paid in the Lisbon and Oporto Mints for a mark of gold (22 carats) was 96,000 reis (533 fr. 33 cents). This same gold was valued at 102,400 reis (568 fr. 88 cents). For a mark of silver of 11 dinheiros (i.e.11⁄12fine) the value was fixed at 6000 reis (33 fr. 33 cents), producing, when minted, 6300 reis (35 francs). The legal ratio at that date (1688) was 1:16 (for purchase price of the metal), 1:16.25 (for the Mint issue rate).
In 1747 the value of a mark of coined silver was changed, and rose from 35 francs to 41 francs 66 cents (7500 reis), an enactment which changed the ratio at a blow to 13.6.
This ratio remained until the beginning of the present century, and led in short to the expulsion of gold from the monetary circulation.
The law of the 6th March 1822 gave to a mark of coined gold a fixed value of 120 milreis (666 francs 666 cents), and the gold piece, whose value was 6400 reis (35 francs 55 cents), had a value of 41 francs 66 cents (7500 reis). This law was repealed shortly afterwards, together with those passed in the Cortes of 1820, but was restored and ratified by another law of the 24th November 1823, and by a special charter of 5th June 1824.
The preamble of the law of 1822 had declared that the equivalence of 13.5 between gold and silver was very far from expressing the proportion of their mercantile value, and that gold did not practically come into circulation on account of the legal value of such money being below its corresponding value in bullion, the legal ratio was therefore raised to 16 in 1825.
In 1835 a new law, of the 24th April, gave the coined silver mark the value of 7500 reis (41 francs 66 cents), which brought the equivalence to about 15.5, a figure which was considered the average rate of exchange of money, whether national or foreign.
On the 3rd March 1847 a new law was passed raising the value of the gold mark to 128,000 reis (711 francs 11 cents), and the gold piece, whose value had been fixed in 1822 at 41 francs 66 cents (7500 reis), rose to 44 francs 44 cents (8000 reis). After this law other legal measures were taken which established the legal ratio of 16.5.
It was these incessant alterations of ratio which led Portugal to abandon bimetallism. The preamble of the law of 1854, which instituted the gold single standard, expresses this, attesting that the circulation felt the lack of harmony and the disorder produced by alterations in the ratios, that the legal ratio being higher than the commercial ratio hampered the transmission of money and burdened all transactions.
The law was adopted unanimously by the Portuguese Chambers.
The chief feature of the modern monetary agitation—the international conferences and the attempt at international system—is due to the rapid development of bimetallic theory in France, and to the initiative of the United States, as well as to the universal or world-embracing needs of the situation, and the extension of the domain of international law or morality.
It is a mistake to suppose that this new era dates from 1871, from the change in the German monetarysystem and the commencement of the wide divergence between the two metals. The formation of the Latin Union was the initial step in the process, although, in a smaller sphere, German monetary history for centuries had been acquainted with Mint conventions between very divergent systems, and had shortly before furnished another illustration in the Conference of Vienna in 1857. The first widely-embracing international conference proper, however, was the outcome of an expression of opinion in the conclave of the Latin Union. It was called at the invitation of France, and met at Paris on the 17th June 1867. The States represented were Austria, Baden, Bavaria, Belgium, Denmark, Spain, the United States, France, Great Britain, Greece, Italy, the Netherlands, Portugal, Prussia, Russia, Sweden and Norway, Switzerland, Turkey, and Würtemberg. The eight sessions of the conference occupied till the 6th July 1867. All the states except Holland declared in favour of a gold standard. It closed without arriving at any actual or practical conclusions, but the president, De Parieu, in his concluding oration, considered himself justified in asserting that the sense of the conference was in favour of a gold monometallic standard, approximating, as near as the occasions of future Mint change in the various states would permit, to a unit based on the 5-franc piece (620 tale to a kilogramme of gold).
THE CONFERENCE OF 1868
Though without immediate practical result, theconference initiated a wide movement. In England it was followed by the appointment of a commission, 18th February 1868, "to consider and report upon the proceeding of the said international monetary conference, ... and to examine and report upon the recommendations of the conference, and their adaptability to the circumstances of the United Kingdom, and whether it would be desirable to make any and what changes in the coinage of the United Kingdom, in order to establish, either wholly or partially, such uniformity as the conference had held in contemplation."
The commission sat from the 13th March to the 8th July 1868, but closed without practical decision, in regard of the difficulties lying in the way of an international coinage. In particular, the proposition of a reduction of the pound sterling to the 25-franc piece was rejected.
In France the whole course of public opinion, both before and after the conference of 1876, and in the concluding examination of theEnquêteof 1865-69, ran strongly in favour of gold monometallism, and the opinion has been unflinchingly held and expressed that only the breaking out of the Franco-German War prevented the adoption of that system in France and in the states of the Latin Union. It is hardly too much to say that the conclusion of the war, with the heavy war indemnity which she thereby suffered, took the initiative in monetary legislation out of the hands of France.
Along with the latest reconstruction of her hoary imperial scheme, Germany effected her great and greatly-needed monetary unification and reform. She accomplished it on the basis of the old or French ratio of 15:5, and for two years after the reception of the scheme the price of silver maintained itself moderately. On the 9th July 1873, however, she completed the system by the Legal Tender Law, which demonetised the silver currency, and gradually more than two-thirds of the total old German silver money was called in, melted into bullion, and flung on the market. Concurrently, other changes were at work on the Continent. In 1872 the Scandinavian States followed the example of Germany and adopted a gold in place of a former silver standard. By the treaty of 18th December 1872 a common system was established between Sweden, Norway, and Denmark. For Sweden the conversion of the silver currency was based on a ratio of 15.57, for Denmark 15.43, and for Norway 15.44. Three years later the Netherlands followed suit. By their law of 6th June 1875 and 10th May 1876 they adopted a gold in place of their previous silver standard at a basis ratio of 15.625.
Before the completion of these widespread changes, the great fall in the gold price of silver had begun, and the United States in her silver-producing interests, Great Britain in the interests of her Indian dependency and in those of her trade with silver-using countries, and the whole commercial world generallyin the dislocation of international exchange, found themselves menaced by gravest danger.
THE DEPRECIATION OF SILVER
Before the inrush of silver to the Mint, caused by such a fall, the Latin Union first limited and then abandoned its coining of the 5-franc piece.
The fall of silver became thereby only the more acute and confirmed. By July 1876 it had sunk to 463⁄4per oz. Apprehension was universally felt, and in both England and the United States fresh commissions were appointed to consider the question. The English commission on the depreciation of silver was appointed in March 1876, and sat from the 20th March to the 8th May, under the presidency of Mr. Goschen. The investigation turned upon the causes of the prevailing situation, without any attempt at the suggestion of a remedial positive system.
Later, in the same year (15th August), the American Congress voted the appointment of a like commission, to inquire into the causes of the depreciation of silver and into the feasibility of a reconstruction of a bimetallic system, as well as to devise a ratio and measures for the facilitation of a return to cash payments in the United States. This commission resulted in a double report, the 'majority' and the 'minority' report. The majority, comprising Messrs. Jones, Bogy, Willard, Groesbeck, and Bland, recommended the remonetisation of silver and the recourse to a fresh international conference. This latter proposition was expressed in the compromise known as the Bland Bill, the "Act to authorise thecoinage of the standard silver dollar, and to restore its legal tender character, 28th February 1878." Section 2 of this law imposed it upon the President of the United States to invite the members of the Latin Union and the other interested nations to an international conference. On the invitation of France this conference met in Paris on 10th August 1878. The American delegates proposed the free coinage of silver in an international agreement and its unrestricted employ on a full equality of tender with gold. The delegates of Belgium, Switzerland, and Norway combated the proposals, and, on the part of England, Mr. Goschen declared that while the complete demonetisation of silver portended a commercial crisis to which no parallel could be found, England could consent to no serious modification of her currency system. Germany was not represented, and in her absence France adopted a waiting policy, and the conference closed with an impotent expression of opinion that, in view of the difference of opinion, it was useless to discuss an international ratio, and that, while it was necessary for the world to maintain the currency of silver, the choice and treatment of each or either metal must be left to the particular monetary situation and needs of each separate state.
It was not to be expected that so lame a conclusion could stand before the needs of the situation. On the 19th May 1879 the landed interest in Germany succeeded in driving the Chancellor of the Empire to suspend the further sale of silver. The circumstancegave fresh hope to the bimetallists, and a busy propaganda was carried on throughout Europe and the States. The renewed international conference of 1881 is to be regarded as an outcome of this movement.
THE CONFERENCE OF 1881
On the invitation of the United States and France the third international conference met in Paris on the 19th April 1881. All the European States, Canada, India, and the United States were represented.
France, through her delegates, Magnin, the president of the conference, and Henri Cernuschi, at once and boldly declared for bimetallism. The United States, Italy, Austria, the Netherlands, and British India followed suit. On behalf of their states the British and German delegates declared that no change in the currency systems of their countries could be entertained, but in case of an agreement among the chief nations certain regulations to increase the monetary employment of silver might be devised. Belgium, Switzerland, Greece, and the Scandinavian kingdoms declared against bimetallism. After a recess from the 30th June to the 19th May the conference closed on the 8th July 1881 with a nominal adjournment to the 12th April 1882, so as to give room for possible currency legislation in the meantime. On the day fixed, however, the conference, as need hardly be said, did not reassemble.
Practically, in the interval between the second and third of these international delegations, the monetary situation had not perceptibly altered. The price ofsilver in 1878 had been 529⁄16, in 1881 it was 5111⁄16: the general level of prices had, if anything, slightly improved, while the production of silver had not materially increased (from 2,551,000 kilogrammes in 1878 to 2,593,000 kilogrammes in 1881), though that of gold had certainly decreased. The close of the conference was, however, followed by a strong bimetallic agitation in England and Germany, which found united expression in the Bimetallic Congress at Cologne in October 1882.
This congress unanimously adopted the following resolutions:—
"That in order to the establishment of a firm ratio between gold and silver, it is desirable for England and Germany—
"1. To increase the employment of silver by minting full tender silver by the side of the divisional restricted tender silver.
"2. That Germany should withdraw all gold and paper below the value of 10 marks [and replace it by silver].
"3. That Germany should sell no more silver.
"4. That the Bank of England should put in practice the clause of her charter which allowed her to employ silver as part of the bank reserve."
The conclusions of this congress had, however, no practical influence on the course of policy of either nation.
In the United States a parallel though more interested agitation was conducted, centring roundthe yearly proposed repeal of the compulsory minting clauses of the Bland Bill.
THE ENGLISH GOLD AND SILVER COMMISSION
In England the commercial depression, consequent upon falling prices and the dislocation of exchanges with India and the East, ran its full course, and gave fresh ground for activity to the then recently formed Bimetallic League.
In the course of 1886 silver had sunk to 42d. per oz., and when the royal commission on the depression of trade and industry closed its investigations, with the expression of a desire for an inquiry into the state of the precious metals, the British Government only too gladly acceded. On the 20th September 1886 the royal commission "to inquire into the present changes in the relative values of the precious metals" was appointed. Its final report was made in October 1888, and, as is well remembered, was of a divided nature. All the members of the commission agreed that the action of the Latin Union in 1873 broke the link between gold and silver, which had kept the price of silver, as measured by gold, constant at about the legal ratio, and thereby left silver exposed to the influence of all the factors which go to determine the price of a commodity. On the question of bimetallism, in reference to the actual and to any possible currency system, the commissioners disagreed, and made separate reports. Lord Herschell, Sir C.W. Fremantle, Sir John Lubbock, Sir Thomas Henry Farrer, J.W. Birch, and Leonard H. Courtney expressed themselves adversely.
"Though unable to recommend the adoption of what is commonly known as bimetallism, we desire it to be understood that we are quite alive to the imperfections of standards of value, which not only fluctuate but fluctuate independently of each other, and we do not shut our eyes to the possibility of future arrangements between nations which may reduce these fluctuations. One uniform standard of value for all commercial nations would, no doubt, be a great advantage. But we think that any premature and doubtful step might, in addition to its other dangers and inconveniences, prejudice and retard progress to this end.
"We think also that many of the evils and dangers which arise from the present condition of the currencies of different nations have been exaggerated, and that some of the expectations of benefit to be derived from the changes which have been proposed would, if such changes were adopted, be doomed to disappointment.
"Under these circumstances we have felt that the wiser course is to abstain from recommending any fundamental change in the system of currency under which the commerce of Great Britain has attained its present development."
From these opinions dissent was directly expressed in PartIII.of the report by the remaining members—Sir Louis Malet, A.J. Balfour, Henry Chaplin, Sir D. Barbour, Sir W.H. Houldsworth, and Sir Samuel Montague.
DISSENT FROM REPORT OF COMMISSION
"We cannot doubt that if the system which prevailed before 1873 were replaced in its integrity most of the evils which we have above described would be removed; and the remedy which we have to suggest is simply the reversion to a system which existed before the changes above referred to were brought about—a system, namely, under which both metals were freely coined into legal tender money at a fixed ratio over a sufficiently large area.
"The remedy which we suggest is essentially international in its character, and its details must be settled in concert with the other powers concerned.
"It will be sufficient for us to indicate the essential features of the agreement to be arrived at, viz.:—
"1. Free coinage of both metals into legal tender money.
"2. The fixing of a ratio at which the coins of either metal shall be available for the payment of all debts at the option of the debtor.
"We submit, therefore, that the chief commercial nations of the world, such as the United States, Germany, and the states forming the Latin Union, should, in the first place, be consulted as to their readiness to join with the United Kingdom in a conference, at which India and any of the British colonies which may desire to attend shall be represented, with a view to arrive, if possible, at a common agreement on the basis above indicated."
Such a report was claimed as a victory for either side, but its doubtful tenor only confirmed the rootedsuspicion of the English administration as regards any change of the currency system. And when, on the occasion of the Paris Exhibition in 1889, a free International Monetary Congress was held, as one of the numerous special congresses connected with the celebration, Great Britain was not represented among the 194 members who attended on the invitation of the organising committee. M. Magnin, governor of the Bank of France, presided at the sittings, which covered from the 11th to the 15th September. Like its predecessor, the international conference, this congress closed without direct or practical resolution. Putting out of view this congress as of a more informal nature, a period of eleven years elapsed between the still only prorogued conference of Paris of 1881 and the conference of Brussels in 1893. This—as yet the last—conference was summoned on the initiative of the United States, but from the commencement a distinct difference of tone and method made itself felt; the Government of the United States recognising that some European countries might not be willing to adopt the remedy which they would prefer, namely, "the establishment of some fixity of value between gold and silver, and the free use of silver as a coin metal, upon a ratio to gold to be fixed by an agreement between the great commercial peoples of the world." The invitation to and purpose of the conference were conveyed in quite general terms, namely thus, "For the purpose of considering what measures, if any, could be taken toincrease the use of silver in the currency systems of nations."
THE BRUSSELS CONFERENCE
The invitation was accepted by all the most important states, and at the first meeting, on 26th November 1892, the delegates of twenty Governments were present, namely, Austria, Hungary, Belgium, Denmark, France, Germany, Great Britain, British India, Greece, Italy, Mexico, The Netherlands, Norway, Portugal, Roumania, Russia, Spain, Sweden, Switzerland, Turkey, and the United States.
The proceedings were opened by M. Beernaert, President of the Council and Finance Minister of Belgium. M. Montefiore Levi, senator, and delegate of Belgium, was chosen as president, and his Excellency, M. Edwin H. Terrell, Minister of the United States at Brussels, and one of the delegates of the United States, was chosen vice-president.
At the second meeting the American delegates submitted a scheme for international bimetallism, but, in conformity with the terms of the invitation, at the same time expressed a hope that the powers represented would consider and submit other plans for the enlarged use of silver. Two such proposals they themselves suggested for discussion—(1) the plan of M. Moritz Levy, proposed at the conference of 1881, and (2) the plan proposed by the late Dr. A. Soetbeer. The main design of both these proposals was to increase the use of silver, by substituting silvercoinsor notes based on silver, for such small goldcoins and small notes based on gold as are at present in circulation.
At the same session the delegates of Germany, Austria, and Russia explained that they were instructed not to express an opinion or to vote upon any resolution. Roumania, Portugal, Turkey, and Greece not having special instructions, felt themselves compelled to take up a similar attitude. Finding that France and the States of the Latin Union were apparently more disposed to criticism of, rather than to cordial co-operation with, the objects of the conference, the delegates of the United States did not press for a resolution on the wider question of bimetallism, and the attention of the conference was accordingly fixed on the subsidiary suggestions. To these latter, as above, was added on the same day a third, made by Mr. Alfred de Rothschild, to the effect that on condition of the United States continuing her purchases of 54 million oz. of silver yearly the different European powers should combine to make certain yearly purchases, say to the extent of £5,000,000 yearly; these purchases to be continued over a period of five years, at a price not exceeding 43 pence per oz. On a rise of silver above that price the purchases for the time being to be immediately suspended.
In committee this latter proposal was thus modified—
1. The European states which agree, upon the basis of this proposal, will buy in each year 30million oz. of silver, on condition that the United States agree to continue their present purchases, and that unlimited free coinage be maintained in British India and Mexico.
2. The proportion of the purchases to be made by each country will be determined by agreement.
3. The purchases will be made at the discretion of and in the manner preferred by each Government.
4. These amounts of silver will be devoted in each country to the monetary uses authorised by the legislation of that state, and the silver will be either coined or made the guarantee for an issue of ordinary or special notes, as Government may think fit.
5. The arrangement will be made for five years. The obligatory purchase of silver will be suspended should the metal reach in the London market a price determined by agreement between the Governments. The purchases may be renewed, if the delegates of the different countries interested should agree upon the fixing of a new limit of price. They should be renewed in any case if the price falls below the original limit.
With regard to the Soetbeer plan it was abandoned in committee, while the Levy plan was drawn up in the following terms:—
"1. The withdrawal from circulation within a period of ... of gold coins containing a weight of less than 5.806 grms. of fine gold (20-franc pieces).
"2. The withdrawal of notes of a less value thanthe coin of 20 francs or its equivalent, an exception being made of notes representing a deposit of silver."
The manner of adopting and recommending these schemes to the conference from the committee was peculiar. The British delegate, Sir C. Fremantle, declared that he could not entertain the "Levy" except in conjunction with the "Rothschild" scheme, and while recommending the latter to the conference for discussion, the states of the Latin Union declared that even if passed, they could not recommend the plan to their Governments.
At the fourth session M. Boissevain declared that there were insurmountable obstacles to its adoption by the Government of the Netherlands. General Strachey said that unless it received more favour than was indicated by the report, he would be unable to support it. Mr. Allard, one of the Belgian delegates, declared that it was insufficient, and Sir Rivers Wilson declared, on behalf of himself and Sir Charles Fremantle, that recognising that this want of support would prevent them from recommending the plan to their Government, they would refrain from taking part in a detailed discussion of it, although they did not consider it inconsistent with the monometallist opinions which they held. Mr. M'Creary (delegate for the United States), then stated that he did not consider M. de Rothschild's proposal, as it stood, equitable to the United States, and therefore that he would be unable to support it.
CLOSE OF THE BRUSSELS CONFERENCE
In view of the various declarations, M. de Rothschild withdrew his plan, and there was left before the conference only the Levy plan. This latter was favourably regarded, but was radically insufficient for the situation, and not considered important enough to receive really vigorous support.
The course of the conference thereupon returned to the general discussion of the bimetallic proposal of the United States. In this discussion the attitude of reserve which the French delegates had maintained was abandoned, and M. Tirard declared with the greatest clearness that he could not advise his Government to open the French Mints to the free coinage of silver, unless there was a general agreement on the part of other nations to open their Mints also. Until, therefore, there should be a decided change of opinion on the part of Great Britain, Germany, Austria, the Scandinavian States, and other monometallic states, the question of returning to the free coinage of silver must be looked upon as settled.
In view of such declarations the delegates of the United States declared that they would not press for a vote upon the question of bimetallism. And the conference closed with a formal adjournment, should the Governments approve, to the 30th May 1893.
The close of the conference was a heavy blow to the bimetallic cause, as illustrating so fully the impossibility of any arrangement. Germany, Denmark,Sweden, and Norway, declared clearly that no change would be made on the gold basis of their currency. The delegate of Austria Hungary was equally explicit in his statement that his Government had every intention of abiding by the gold standard they were in the course of adopting.
The decided lead of France was followed punctually by Switzerland, Italy, Belgium, and Greece. The Netherlands were prepared to join a bimetallic union, provided that Great Britain formed a part of it; and Spain and Mexico were willing to adopt bimetallism, or other measures which would have the effect of raising the price of silver. No declaration was made on the behalf of Russia, though one of the delegates, speaking personally, was an active supporter of the gold standard. The Roumanian Government did not consider bimetallism a practical possibility, and Turkey and Portugal expressed no opinion.
Practically, the United States stood alone in advocacy of bimetallism. In addition to this fact, the situation was rendered much more trying for her delegates by the fact that since their appointment the presidential election had placed the Democratic party in power, and great uncertainty prevailed as to the attitude and intentions of a new President and Congress. "In these circumstances it soon became evident that the delegates were anxious for an adjournment of the question to give the new Government the opportunity of expressingtheir views, and that the conference would adjourn without any practical result. But, nevertheless, some very important statements and declarations were elicited in the course of the debates. In the first place, in addition to the distinct declarations on the part of some of the most important European powers that they would not entertain bimetallism, the representatives of the United States announced in very clear language that at any moment their Government might be disinclined to continue their purchases of silver, and that they were determined to protect their stock of gold. The Indian delegates alluded to the possibility of their Government finding itself under the necessity of closing its Mint to the free coinage of silver."
GOLD STANDARD FOR INDIA
Already, before the calling of the Brussels Conference, it had been recognised that, in case of failure to arrive at a bimetallic agreement, it would be essential thus far to close the Indian Mint, and to attempt the establishment of a gold standard in India. This impression, together with a draft scheme for a gold currency, was conveyed in a minute of Sir David Barbour's, addressed to the Secretary of State, 21st June 1892. As the result of correspondence between the Secretary of State for India in Council and the Government of India the British Government, on the 21st October 1892,i.e.a month before the meeting of the Brussels Conference, nominated a committee to consider the proposals submitted by the Indian Government for stopping the free coinage ofsilver in India, with a view to the introduction of a gold standard.
The committee consisted of—The Lord High Chancellor; The Right Hon. Leonard H. Courtney, M.P.; Sir Thomas Henry Farrer, Bart.; Sir Reginald Earle Welby, G.C.B.; Arthur Godley, Esq., C.B.; Lieutenant-General Richard Strachey, C.S.I.; Bertram Wodehouse Currie, Esq.
A hope was at first expressed that the committee would be able to make its report before the meeting of the conference at Brussels. But it was not actually made until the 31st May 1893.
The part which India has played in the currency history of the world has beencharacteristicand uniform from the first. India is, and has been, from the birth of international commerce, the receptacle or sink for the precious metals of the civilised Western world. The fact that in so being she has constituted herself the safety-valve of the world's currencies is not confined to the present day merely. It is peculiarly applicable to the present day, with our organisation of banking and credit, which has concentrated the metallic reserves in certain burning central spots, and built thereon a superstructure of credit transactions so vast and in so delicately poised a manner that any undue addition to the metallic reserve sends a shudder of excitement and speculation through the whole, inducing over-trading and over-funding, and in theend a crisis. Such is the structure of the world's commerce that India provides an outlet or drain for any sudden crisis-bringing inflow of precious metal, and preserves the equilibrium of our system. The fact is patent to-day, because the nature of our credit and banking system is understood. But in reality this function India has performed through ages.
The influence she now exerts through impact with a highly delicate credit system, she formerly exerted on a less uniform and delicate system by the rougher influence of prices generally. The gain attending the Eastern trade in the sixteenth and seventeenth centuries was not measured by modern conceptions of dividends or trading margins. To the European trader the intercourse was attended with a double gain, commercial and financial—the latter really bimetallic in nature from the higher ratio then prevailing between silver and gold in India.
To India it meant a perpetual balance of trade in her favour, if such a phrase can be used of such a situation,—a continual inflow of precious metal. Her capacity of absorption of metal seems as large and unsatisfied as ever, and, on the assumption of an unaltered situation in Europe and America, her function in the world's currency system still remains—feasible and beneficent. It is the most difficult question attending the modern currency crisis, whether such assumption of an unaltered situation is permissible.
Further than this, as a simple matter of fact,the currency difficulty with India at the present moment is purely governmental and commercial. The Indian Government has yearly to remit a very large sum to this country in discharge of its gold obligations. In 1873-74, before the great fall in silver commenced, the amount remitted was £13,285,678, which, at the rate of exchange of 1 rupee = 1s. 10.35d., meant 142,657,000 rupees. During the year 1892-3 the amount remitted was £16,532,215, which, at the average rate of exchange in that year, 1s. 2.985d., required a payment of 264,784,150 rupees. If this could have been remitted at the exchange of 1873-74, it would only have needed 177,519,200 rupees, making a difference of 87,274,950 rupees. The result of this is to turn what would be a surplus of revenue into a large deficit. At an estimated exchange of 1s. 4d. per rupee for the past year, a surplus of revenue over expenditure was shown of 1,466,000 rupees. The exchange having fallen to an average of rather less than 1s. 3d., this surplus has been converted into an estimated deficit of 10,819,000 rupees. Notwithstanding the improvement of the revenue by 16,533,000 rupees over the budget estimate, the situation at the close of 1892 was fraught with a double danger to the Indian Government. The fall of silver—which had been such that during the year exchange could scarcely be maintained at 1s. 25⁄8d. for the rupee by the refusal to sell bills in India below that rate—might still proceed. And, secondly, in case of failure attending theBrussels Conference, the United States would be inevitably driven to abandon her single-handed attempt to keep up the price of silver by her silver purchases. In that case an unexampled fall of silver might be expected. The only practical solution of the difficulty was the adoption of a gold standard for India, and in order to do so at a workable rate for the rupee it would be necessary to anticipate such further fall.
So much, in very brief, for the Government situation. For the commercial,—the harassment of trade by fluctuations of exchange, the check to investments, the handicapping of the Lancashire manufactures, and so on,—all this ground is still strewn with the débris of debate and difference. As far as the currency question, pure and simple, is concerned—such, that is, as is conceived of throughout this book, viz. metallic—it is almost incapable of presentation or realisation. Through the extraordinary preference of the Indian for the precious metals as metals or as a commodity, quite apart from currency use, the ordinary action of such monetary laws as have been at work in Europe for centuries is nullified—to how great an extent it is quite impossible to estimate. The minting of silver has been such as might be expected under the conditions of free minting of a cheapening metal—i.e.it has risen on an average to the full amount of the net imports of silver. But, conversely, there has been no such reactionary influence of such mintingson the gold store of the country as would have taken place in Europe. The importations of silver have gone hand in hand with a net importation, not exportation, of gold, with no traceable evidence of bimetallic action.
The establishment of the gold standard for India is, therefore, primarily and in greatest part a governmental measure. As far as relates to such purely scientific phenomena and considerations, as have governed the European currencies for centuries, India still presents field for little or for very questionable observation.[22]