Chapter III · (continued 2)

Bars 402,382.6 214,825.7

Austrian gold coins 381.7 711.9

Francs and Napoleons 391,166.5 809.7

Sovereigns 30,181.3 223.1

Russian gold coins 28,252.3 20,862.1

Isabellas 12,822.9 ...

Dollars and Eagles 16,860.1 20,548.8

Turkish gold coins 51.0 1,084.0

946,191.2

Making a complete total, with odd amounts from various sources, and including imperial gold coins minted in 1877-78 but now no longer current, of 1,205,786 lbs. weight = £84,103,584.

SALES OF SILVER BY THE GERMAN GOVERNMENT FROM 1873 TO THE SUSPENSION OF THE SALES IN MAY 1879

SALES OF SILVER BY THE GERMAN GOVERNMENT FROM 1873 TO THE SUSPENSION OF THE SALES IN MAY 1879

Date. Pounds of Fine Silver. Product. Price Per oz.

Marks. Pence.

1873 105,923.372 9,296,682.77 59 5⁄16

1874 703,685.175 61,135,670.29 58 3⁄4

1875 214,898.594 18,208,449.08 57 1⁄4

1876 1,211,759.204 93,936,482.37 52 3⁄8

1877 2,868,095.533 230,424,238.51 54 5⁄16

1878 1,622,696.403 126,203,852.08 52 9⁄10

1879 377,744.712 27,934,417.89 50

7,104,895.993 567,139,992.99

The total silver withdrawn from circulation up to the close of 1880 was 1,080,486,138 marks.

Of this amount 382,684,841 marks were delivered to the Mint for coinage into the new imperial silver coins.

The remaining 696,797,069 marks were melted into silver and produced 7,474,644 pounds of fine silver. Of this quantity 7,102,862 were sold up to May 1879. The balance of unsold silver still in the hands of the Imperial Government is 339,353 pounds of fine silver.

England.

Charles II. began his regulation of the currency by the proclamation of 29th January 1661, fixing the coins to be current and their tariff. This proclamation was followed by another, of 10th June 1661, against the export of gold or silver, and against buying or selling the metals at higher rates than were given at the Mint, a practice to which the proclamation attributed the scarcity of money. This edict proved of no avail, for, in spite of it, the gold coins were exported in such quantities that they were current more abundantly in foreign parts than in England. As the result of deliberation of the Privy Council, assisted by the Commissioners of Trade and officers of the Mint, who all attributed the export to the higher price of gold abroad, it was determined to raise the price of the gold coins to or near the value which they had on the Continent at the moment. Accordingly, by proclamation of the 26th August 1661, the value of the gold unite was raised from 22s. to 23s. 6d., and other gold coins in proportion, the silver currency being left unaltered.

In referring to the Act for the free trade in gold and silver (supra, p. 162), mention has already been made of the motive of the legislator, namely, to increase the importation of the metals to the Mint. Exactly similar was the intention, as expressed in the preamble of the succeeding Act of 1666 (8 Charles II. c. 5), which abolished the right of seigniorage, thereby establishing free and gratuitous coinage in England—the principle of minting still in force in this country.[17]

ENGLAND: CHARLES II

The testimony of both Act and declaration as to the scarcity of money is confirmed by actual record. In the following year, 1667, there was a great scarcity of money, and dollars and pieces of eight were bought up by the goldsmiths and bankers for 4s. 3d. each, and instead of being brought to the Mint were at once exported to France for 4s. 10d. and to Ireland and Scotland for 5s.

According to the new indenture for the coinage of 1670, a slight reduction in the standard of the gold took place, the pound of crown gold (22 carats fine) being to be minted at a tale of £44, 10s. The scarcity of money still continued, however, and the separate experience of Ireland only corroborated that of England. The general statement of the case as to the fate of the coined money since the Act of 18 Car II., which instituted free coinage, is thus put by Sir Dudley North, in his Discourses upon Trade: "I call to witness the vast sums that have been coined in England since the free coinage was set up. What is become of it all? Nobody believes it to be in the nation, and it cannot well be all transported, the penalties for so doing being so great. The case is plain—the melting-pot devours it all; and I know no intelligent man who doubts but the new money goes this way. Silver and gold, like other commodities, have their ebbings and flowings; upon the arrival of quantities from Spain, the Mint commonly gives the best price, i.e. coined silver for uncoined silver, weight for weight. Wherefore it is carried into the Tower and coined. Not long after there will come a demand for bullion to be exported again. If there is none, but all happens to be in coin, what then? Melt it down again; there's no loss in it, for the coining costs the coiners nothing. Thus the nation hath been abused and made to pay for the twisting of straw for asses to eat."

By the time of the accession of William III. the scarcity of silver had become so great as to cause a petition from divers working goldsmiths in and about the City of London to the House of Commons (9th April 1690). It stated "that upon search at the Customs they found that since last October entries had been made of 286,102 oz. of silver in bullion, and 89,949 dollars and pieces of eight for exportation by divers private persons, and they doubted not but it would appear that not only the East India Company, but also divers Jews and merchants, had of late bought up great quantities of silver to carry out of the kingdom, and had given 1 1⁄2d. per oz. above the value, which had encouraged the melting down of much plate and milled monies; whereby for six months past, not only the petitioners in their trade, but the Mint itself had been stopped from coining."

ENGLAND: THE EXPORT IN 1690

The petition was referred to a committee of the Lower House, which reported on the 8th May that great quantities of silver had been exported, of which seven-eighths had been shipped off by the Jews, who would do anything for their profit. The reason for the exportation, too, was plain, for the French king, of late finding his money very scarce, had raised his coin 10 per cent., which was an encouragement to send silver to fill his coffers, and therefore the Jews exported it daily in very great quantities. The melting down of £1000 of milled money for exportation was attended with a profit of £25 ready money and upwards, silver being coined at the Mint at 5s. 2d. per oz., but at the time of exportation sold generally at 5s. 3 1⁄2d. The remedies proposed to the committee were either a prohibition of export or the enhancing of the English monies.

Not less than three measures were presented to the House for the prohibition of export—one of them by Sir Richard Temple—but were all lost; and, meanwhile, the exports to Holland and France continued. In November 1690 it was calculated that during the preceding sixteen months about 140,000 oz. had been exported.

In addition to this actual drain of coinage, the processes of culling, clipping, and counterfeiting, which had been going on through the reigns of Charles II. and James II., had resulted in an unexampled depreciation of so much of the coinage as remained. A large portion of the currency consisted of iron, brass, or copper-pieces plated, and such coins as were of good silver were worth scarcely one-half their current value.

This statement is more than borne out by quite reliable computations which were made in the process of the recoinage five years later. A medium lot of 5 1⁄2 bags, containing in tale £57,200 of the called-in currency, and which should have weighed 221,418 oz. 16 dwt. 8 grs., was found to weigh only 113,771 oz. 5 dwt. According to the accounts of Neale, then master and warden of the Mint, 4,695,303 dwt. 15 oz. 2 grs. of the clipped silver money produced only 790,860 lbs. 1 oz. 19 grs., implying a depreciation in weight alone of over 47.75 per cent.

The process of stripping the country of currency was increased by the continual pouring out of money in aid of William's wars, and the loss in exchange on such large remittances made the evil only too apparent. The one or two millions yearly remitted to the Continent for the British armies were negotiated in Holland in a thousand ways to England's prejudice. Partisan statements were made that whereas in the beginning of the war the Dutch allowed 43 schillings for an English pound they gradually lowered the exchange to 28 schillings. Guineas, which were equal in value to 21s. 6d. in silver, rose to 30s.; and they would have risen to a still higher rate if the officers of the exchequer and the receivers of public revenue had not refused to receive them in payment at the increased value.

In 1695 the matter was taken up in the House of Commons, and a committee appointed. The report of this committee, which was never passed, was based on the proposition of a reduction of standard. By Montague's influence the proposals were dropped, and it was not till the 22nd November that the Act for remedying the ill state of the coins passed. It is well known that the unwise determination of the Government of William III. to adhere to the pre-existing standard was due to the action and contrivance of Montague as Chancellor of the Exchequer, and to the influence of Locke's writings. By a subsequent series of Acts, based on the complaints of merchants representing the evils resulting from the unsettled price of gold, the price of the guinea was ordered to be gradually reduced from 30s. to 28s., 26s., and finally 22s., before 10th April 1696.

ENGLAND: RECOINAGE OF 1696

This great recoinage scheme was only completely accomplished in 1699, having occupied the greater part of four years, and after a long series of Acts and proclamations of, occasionally, very doubtful wisdom.

According to the accounts of the officers of the Mint, the new silver coin amounted in tale to £6,882,908, 19s. 7d. The worn and clipped money called in was estimated roughly at £4,000,000, on which the loss was about £2,000,000; the whole charge and loss being stated at not less than £2,700,000. It is significantly affirmed that, in a manner, all the called-in silver was found to consist only of pieces coined between the days of Edward VI. and 1662, a sure indication of the fate which had befallen the coinage issued since the Restoration.

Before the transaction was finally complete the last safeguard and complement of the system had been adopted, in fixing the relation of the gold coinage to the new silver issue. On the 22nd September 1698, a report was given in to the House of Commons, signed by four names, including that of John Locke, stating that the value of gold in Holland and the neighbouring countries was, as near as could be computed upon a medium, 15:1 in silver; and that, according to this value, the currency of the guinea at 22s. was too high, and occasioned a disproportionate importation of gold and an exportation of silver. The bringing down of the guinea to 21s. 6d. would make the value of English gold and coin very near 15 1⁄2:1 to silver, which, though not so low as the rate in Holland, would in their opinion be sufficient to correct the error.

In consequence of this report the Commons resolved that, under the Act 7 and 8 William III. chap. 19, no person was obliged to take guineas at 22s. a piece. The price then fell to 21s. 6d., at which rate they were received by the officers of the revenue. With the exception of this merely declaratory tariffing of the guinea, it is to be borne in mind that this recoinage of William's reign was carried out on the principle enunciated by Montague, and backed by the authority of Locke, namely, that of a retention of the old standard, although in the face of a clearly established advance in the value of silver, and in face of quite irrefutable answers to all Locke's arguments. Momentarily the scheme succeeded; the adverse exchange was instantly redressed, while the renewal of the coinage and the ratio of 1698 was sufficiently above the continual ratio to turn the flow of gold, as doubtless was the (unexpressed) design in adopting it. According to Burnet the packet-boat from France seldom came over during the following winter without bringing 10,000 louis d'or, and often more. "The nation was indeed filled with them, and in six months a million of guineas was coined out of them. The merchants in fact said that the balance of trade was then so much turned to our side that whereas we were wont to carry over a million of our money in specie, we then sent no money to France, and had at least half that sum sent over to balance the trade."

ENGLAND: EFFECTS OF THE RATIO OF 1698

The circulation of French and other foreign gold became so great that on the 5th February 1701 the Council issued a proclamation that the louis d'or and Spanish pistole should not pass for above 17s. Such action at once brought those coins to the Mint, and nearly 1 1⁄2 millions were coined out of them.

It was not seen at the moment that the establishment of this ratio so favourable to gold was pari passu unfavourable to silver. The idea was entertained that the French gold came over to bribe English members, i.e., on mere political causes. The hypothesis was needless as it was incorrect. Gold came over because it was higher priced in England than abroad through the ratio of 1698, and for the same reason silver left the country to pay for the gold. The one movement was the essential counterpart of the other, and made itself at last only too visible.

As early as the seventh year of Anne's reign—only nine years after the completion of this great recoinage, it was found necessary to give further encouragement to the coinage of silver by offering a premium on every ounce of foreign coins which should be brought to the Mint within a limited time. The premium was not to exceed 2 1⁄2d. per oz., and the time limited was from the 17th April to the 1st December 1709.

Such a measure has been already noticed in the history of France; it was indeed a design frequently employed there under the title of Surachat, and it always proved as futile as the Government of Anne found it to be. As the drain continued, representations were made by the officers of the Mint to the Treasury, and in 1717 the House of Commons requested these representations to be laid before it (December 20th). On the same and following day a remarkable speech was made by a member, Mr. Aislabie, who took notice of the great scarcity of the silver species, and proposed the remedy of lowering the gold species. On the second day he was seconded by Mr. Caswall, who suggested that the overvaluation of gold in the current coins of Great Britain had caused the export of great quantities of silver species, "and to that purpose [i.e. the purpose of his argument] laid open a clandestine trade, which of late years had been carried on by the Dutch, Hamburgers and other foreigners, in concert with the Jews and other traders here, which consisted in exporting silver coins and importing gold in lieu thereof; which being coined into guineas at the Tower, near 15 pence was got by every guinea, which amounted to about 5 per cent.; and as these returns might be made five or six times in a year considerable sums were got by it, to the prejudice of Great Britain, which thereby was drained of silver and overstocked with gold." He concluded by proposing to lower the price of guineas and all other gold specie.

ENGLAND: SIR ISAAC NEWTON'S REPORT, 1717

His speech was received with applause, and the House unanimously petitioned the King to call the guinea down to 21s., and other gold species in proportion. To this George I. immediately acceded, and the proclamation to that effect verbatim was issued on the following day, 22nd December 1717.

The report for which the House had called two days earlier, and which was produced on the 21st December, was the celebrated report made some months before by Sir Isaac Newton as master of the Mint, at the demand of the Commissioners of the Treasury. It is a document deserving the careful attention of every student of currency history. Newton reviews the ratio in each of the then commercial nations, and shows the effect of difference of ratio in producing export and disturbance of one or other metal. "Gold in Spain and Portugal is of sixteen times more value than silver of equal weight and alloy; at which rate a guinea is worth 21s. 1d. net; this high price keeps their gold at home in good plenty, and carries away the Spanish silver into all Europe. So that at home they make their payments in gold, and will not pay in silver without a premium. Upon the coming in of a plate [silver] fleet the premium ceases or is but small, but as their silver goes away and becomes scarce the premium increases and is most commonly about six per cent."

In France the ratio was 15:1, and the guinea therefore worth 20s. 8 1⁄2d. In Holland it was worth 20s. 7 1⁄2d., in Italy, Germany, Poland, Denmark and Sweden, from 20s. 7d. to 20s. 4d. "In China and Japan the pound weight of fine gold is worth but 9 or 10 lbs. weight of fine silver, and in East India it may be worth 12 lbs., and the low price of gold in proportion to silver carries away the silver from all Europe." "If gold were lowered only so as to have the same proportion to the silver money in England, which it hath in the rest of Europe, there would be no temptation to export silver rather than gold to any part of Europe, and to compass this last there seems nothing more requisite than to take off about 10d. or 12d. from the guinea."

ENGLAND: THE STATE OF COINAGE IN 1760

In a subsequent report of the 21st September 1717, Newton stated that, since the beginning of 1702 to September 1717, the gold coined at the Mint amounted to £7,127,835, while the silver within the same period only amounted to £223,380, of which £143,086 had been brought to the Mint in response to the premium offered; in 1709 and 1711, of their own free will, the goldsmiths had only brought a matter of £21,220 to the Mint. In the House of Lords, early in the following year, it was proved that during the year 1717 the East India Company had exported nearly 3,000,000 oz. of silver.

The immediate purpose of the above proclamation of 22nd December 1717 was for a time thwarted by a speculative hoarding of silver in expectation of a further calling down of the gold species; and it was to cut the ground from under this speculation that in January 1718 both Houses declared their determination not to alter the standard of gold and silver coins in the kingdom, and proceeded in place of such alteration to prepare a bill for preventing the melting down of the coins of the kingdom.

It is demonstrable, even from Sir Isaac Newton's own figures, that the calling down of the guinea to 21s., though largely, was not completely effective in destroying the profit of arbitrage transactions with Holland. With the guinea at 21s., the ratio was still 15 14295⁄68200 while in France and Holland the ratio was 15 or under. That the process of culling and exporting the heaviest silver specie still continued is proved by the state of silver coinage twenty years later, when shillings were found to be deficient in weight, by between 6 and 11 per cent., and sixpences between 11 and 22 per cent., and all species so scarce as to threaten greatest confusion in every branch of trade. At the accession of George III., 1760, the silver coinage was found in so imperfect a state that the crown pieces had almost entirely disappeared, though minted since 1795 to the amount of over a million and a half sterling. Of half-crowns, likewise minted to the value of £2,329,370, only defaced and impaired specimens remained current, while shillings and sixpences had lost every sign of impression. Up to 1763 only a matter of £5791 in silver had issued from the Mint—practically no coinage at all.

Gradually however, owing to the force of wider principles at work, the matter of the ratio righted itself. Ever since 1756 the value of gold had been rising all over Europe. In 1759 the continental ratio was still calculated at 14 1⁄2, as compared with 15 1⁄5 in England; but by 1773 the continental ratio had overtaken the English, and the market price of standard silver had risen to 5s. 2d. per oz.—the English Mint rate. In the greatly depreciated state of the silver coinage—three-fourths of it was said to be base—even the approach of a fair ratio acted prejudicially on gold. Already, in 1771, the export of gold to Holland had become noticed, and it was asserted that the gold coins had never before been so deficient. They were sent over to Holland, and there filed and returned and put into circulation—a bimetallic phenomenon that always recurs in a currency containing two differently depreciated elements.

ENGLAND: STATE OF THE COINAGE IN 1774

The idea that bimetallic action replaces one good metal by another, an equal weight of one metal for that of the other, a good undepreciated coinage of silver for a good undepreciated coinage of gold, or vice versâ, is not borne out by a single instance in history. Bimetallic action always substitutes the less for the greater, whether weight or value, the more depreciated for the less, or the depreciated for the perfect standard coin. In this particular instance, 1774, the depreciation of silver had been the result of the action of a too high ratio from 1717 onwards; the depreciation of gold was effected in a much less time between 1770 and 1773, simply because the already depreciated state of the silver causing that differentiation of value, which is the bullionist's opportunity, happened to coincide with a natural rise of the value of gold all over the Continent. The result, therefore, of fifty years of bimetallic régime left England with a currency depreciated in both its limbs, in both gold and silver, and as deficient in the quantity current as in the weight of the individual pieces. This is not in keeping with the theory of bimetallism as developed to-day, according to which the transition from one coin to the other would only be made at the point of equation, and the substituted metal would equalise that displaced. This is theory. The facts of the situation in 1774 are not theory but history, and tell a different tale.

"The evil was so great," says Lord Liverpool, "that the Government found it necessary to take this difficult subject into their immediate consideration. On this occasion I addressed a letter to a noble Lord, who was then Chancellor of the Exchequer, suggesting what appeared to me the proper remedy for this evil. I proposed that, with a view to the general reform of the coins of the realm, all the deficient gold coins should in the first place be called in and recoined, and that in future the currency of the gold coin should be regulated by weight as well as by tale, and that the several pieces should not be legal tender if diminished below a certain weight. Your Majesty was pleased to approve of this advice and to propose to your Parliament, on 13th January 1774, the calling in and recoining of all the deficient gold coins; and the Chancellor of your Exchequer opened the whole of this plan to the House of Commons, who approved of the measure, which was carried into immediate execution without any complaint and with great success. The defects which had previously existed in this species of coins were thereby removed, and the regulation, then established, of weighing the gold coin has been the means of preserving it at nearly the state of perfection to which it was then brought."

ENGLAND: RECOINAGE OF 1774

The resolutions of the House of Commons on which this recoinage depended were passed on the 10th May 1774. After stating the depreciation existing in the gold coinage the House asserted—(3) that it has been a practice to export and melt down the new and perfect gold coin soon after it is issued for private advantage, to the great detriment of England; (4) that while pieces of gold coin, differing so greatly in weight, are allowed to be current under the same denomination and at the same rate and value, great quantities of the new will continue to be exported and melted down, and, and perfect pieces there is reason to apprehend, will be recoined into pieces the most deficient that are allowed to be current."

The House then goes on to adopt the principle of limiting the depreciation to be allowed on any single coin, i.e. of making the coins current by weight as well as tale within the limits allowed.

The House next turned its attention to the silver element of the currency. At the outset it was met by the patent fact that the depreciated silver coinage had been made the handle or lever, or point d'avantage, in all the operations against gold. "Whereas," is the recital of the Act of 14 George III. c. 42, "considerable quantities of old silver coin of this realm, or coin purporting to be such, greatly below the standard of the Mint in weight, have been lately imported into this kingdom, and it is expedient that some provision should be made to prevent the practice," etc. The Act therefore decrees the prohibition of importation of light silver coinage into the kingdom, and its confiscation in case of discovery as such. "And be it further enacted ... that no tender in the payment of money made in the silver coin of the realm, of any sum exceeding the sum of £25 at any one time, shall be reputed in law or allowed to be a legal tender within Great Britain or Ireland for more than according to its value by weight, after the rate of 5s. 2d. per oz. of silver, and no person to whom such tender shall be made shall be any way bound thereby or obliged to receive the same in payment in any manner than as aforesaid; any law, statute, or usage to the contrary notwithstanding."

The importance of this latter epoch-making clause is vital. It is the first enactment of a law of tender in the history of English monetary legislation, and it was the first step towards the shaking off the incubus of that mediæval currency system which was even then only coming to be understood in all its fatal perniciousness. For statesmanship, the only parallel to it is that Act of Henry III. of France, which proved so shortlived in its adoption (see supra, pp. 87-88). It was the first step in the evolution of that system of a safeguarded currency which was finally constructed in 1816.

This Act prohibiting the importation of light silver was renewed in 1776 for a further two years, and was again, in 1778, continued until the 1st day of May 1783, and from thence to the end of the next session of Parliament. On the 21st June 1798 the Act, being then expired, was revived and further continued to the 1st day of June 1799 by a new statute, and on the 12th July 1799 the Act was made perpetual by statute of 39 Geo. III. c. 75.

The later legislative action with regard to silver belongs to the final construction of the English currency system. In the main, the recoinage of gold was accomplished in the year 1774, though it lingered over the three succeeding years as appears by the items in the Appropriation Acts.

The accounts of grants for recoinage were as follows:—

1774. The first grant£250,00000

1775. To the bank for receiving the deficient gold coin46,84600

For extraordinary charges of the Mint22,824190

1776. Further grant92,421141 1⁄4

1778.Further grant105,22783

£517,32022 1⁄4

The scope of this series of Acts of 1774 will be seen at a glance; as well as the tendency in policy, namely, in favour of gold, which it indicated. The gold coinage was renewed, and as a safeguard against its future depreciation the existing depreciated coin was cut off from any sapping action upon it by the above restriction as to tender by weight. For the renewal of the silver coinage itself no actual measures were taken save the prohibition of the import of light coins.

For more than twenty years the defective state of the silver coin continued quite unheeded; evidently as no longer causing international embarrassment, now that its function and differentiating action upon the companion metal had been partially tied down and limited.

In 1787 the depreciation of the silver coinage was ascertained experimentally, when it was found that half-crowns were defective by over 9 per cent., shillings by over 24 per cent., and sixpences by more than 38 per cent. of their proper weight. To this depreciation was added an exterior cause of drain by the action of France, who in 1792 increased the scarcity of silver coins and bullion by the issue of her assignats. In that year not less than 2,909,000 oz. of silver were purchased with assignats and sent into France. Five years later an attempt was made to supply the deficiency of the silver coins by the issue of Spanish dollars, countermarked with the hall mark of the King's head. This was after the Bank of England had, in accordance with the minute of the Privy Council of 26th February 1797, suspended cash payments.

ENGLAND: ACT OF 1798

On the 7th of February of the following year, 1798, the subsisting Committee of Council for Coins was dissolved, and a new committee appointed to consider the state of the coins and Mint. During its deliberations, and until it established the new rule, the further coining of silver was suspended by the Act already spoken of, which (21st June 1798) revived the old law against importation of light silver. This suspension of silver coinage was simply a temporary precaution. "Whereas," says the Act, "His Majesty has appointed a committee of his Privy Council to take into consideration the state of the coins of this kingdom, and the present establishment and constitution of His Majesty's Mint, and inconvenience may arise from any coinage of silver until such regulations may be framed as shall appear necessary; and whereas from the present low price of silver bullion, owing to temporary circumstances, a small quantity of silver bullion has been brought to the Mint to be coined, and there is reason to suppose that a still further quantity may be brought, and it is therefore necessary to suspend the coining of silver for the present, be it therefore enacted that no silver bullion shall be coined at the Mint, nor shall any silver coin that may have been coined there be delivered."

There can be little doubt that this enactment was due to Lord Liverpool, and if so that it was intended as an arrest, with a particular intent or bearing; for Liverpool had formed his conception of a monetary theory as early as 1773. None the less it is quite inadmissible to state, as has been done, that this restriction, so evidently and expressly only a temporary or interim measure of self-defence, was equivalent to a placing upon the statute-book of Lord Liverpool's gold monometallical theory. There was as yet no restriction on the legal tender of silver. It was still legal tender to any amount,—it was indeed the standard coin of the realm,—only, in order to avoid the effects of depreciation, and to prevent further depreciation, it was now the law of the land that payments of silver of sums over £25 should be made by weight, and the further coinage of silver was temporarily stopped.

This was not a gold monometallic system, and the Act which established that system was passed eight years after the death of Lord Liverpool, and six years after the Bullion Report of 1810 had been printed.

ENGLAND: THE BANK RESTRICTION

Further than incidentally it is inconsistent with the design of this book to refer to the period of suspension of cash payments and the Bullion Report. These latter are banking phenomena, and will find their place in a treatise of currency in the fuller acceptance of the term, rather than in a treatise definitely restricted to the subject of the metallic currencies. The events of 1797 which led to the suspension,—the remittances to the Continent for war purposes, a failure of credit, a run on the country banks, and then upon the London banks,—had been experienced in 1793 as acutely as in 1797; and, according to the express statement of the report itself, even in the years 1796 and 1797, when the country bankers were making great demands in order to increase their deposits, the market price of gold never rose above the Mint price. These events were therefore one phase of the internal experiences of the country, and have no relation to an international outflow of gold, caused by the heightened ratio which definitely set in in 1794. On the mere ground of first principles, therefore, it is inadmissible to make argumentative use of this event, known as the Bank Restriction, for judgment and illustration in the wider question of bimetallism. Further, the argumentative use that has been made of it—viz. that if from 1773 to 1797 England had possessed a true rather than a halting bimetallic régime, she would have been supplied by its means with an amount of silver that would have increased the metallic reserve and strength of the country, and enabled it to avoid suspension—is inadmissible: and the argument itself is untenable. Such bimetallic action supplying silver could only have begun to operate in 1794, three years before the suspension. It could only have operated by substituting one metal for the other, not by adding silver to gold, but by taking away higher valued gold, and furnishing lower valued silver, i.e. by actually decreasing the metallic strength and reserve of the kingdom. And, lastly, there is the peculiar fact still requiring explaining, that the years of the bank restriction, until, that is, the new Mint law of 1816, saw the heaviest export of silver probably that England has ever experienced. During the ten years, 1801-10, nearly 10 millions sterling of silver was exported from England (over 38,176,016 oz.), while the gold exports amounted only to £2,088,483, so that, of the total export, silver formed 82 per cent. (net amounts used in both cases). It is still well known to what straits this export of silver put the country. In almost every town where there was any employment of labour the tradesmen were obliged to issue token money of their own—shilling tokens, sixpenny tokens, half-crown and five-shilling promissory-notes. Every conceivable form of hand-to-mouth unauthorised currency was resorted to, in order to relieve the needs of the situation caused by the want of silver coins. And stories are still remembered of the straits to which the working classes were driven in order to make their purchases at the week end with one pound notes, for which they could get no change. The explanation of such a phenomenon can only be that the one pound notes having driven gold out of circulation, by a law which is merely another form of the bimetallic law, left only silver available for remittance to the Continent for loans and war purpose. But, whatever the explanation, the fact cuts the ground from under the argument that bimetallism would have saved England from the bank restriction. If silver had not been legal tender to any amount (up to £25 by tale, and beyond that by weight), or again if it had been protected by an agio in 1808 as it was in 1816, it could not have left the country. The straits of the poorer classes in those years of hardship were due to the existing bimetallic system, and to it must, therefore, be attributed the aggravation rather than alleviation of the bank restriction.

If anything is required to confirm such view it can be found in the very terms of that statute of 1816 (56 Geo. III. c. 68), which established the gold standard in England. They reveal the fact that the Act was not so much a philosophical or theoretical declaration of monometallism, such as might have been expected if Lord Liverpool had still lived to dictate it, but a measure for the protection of and relating almost entirely to silver.

ENGLAND: THE ACT OF 1816

"Whereas the silver coins of the realm have, by long use and other circumstances, become greatly diminished in number and deteriorated in value, so as not to be sufficient for the payments required in dealings under the value of the current gold coins, by reason whereof a great quantity of light and counterfeit silver coin and foreign coin has been introduced into circulation within this realm, and the evils resulting therefrom can only be remedied by a new coinage of silver money...."

The Act therefore prescribes the coining of silver, 11 oz. 2 dwts. fine, at a tale after the rate of 66s. per Troy pound, whether the same be coined in crowns, half-crowns, shillings, or sixpences, or pieces of a lower denomination, but to be issued to the importer of the silver, or to the public, after a rate of 62s. per pound Troy.

"And whereas at various times heretofore the coins of this realm of gold and silver have been usually a legal tender for payments to any amount, and great inconvenience has arisen from both these precious metals being concurrently the standard measure of value and equivalent of property, it is expedient that the gold coin made according to the indentures of the Mint should henceforth be the sole standard measure of value and legal tender for payment, without any limitation of amount, and that the silver coin should be a legal tender to a limited amount only, for the facility of exchange and commerce." The Act therefore prescribes the limit of 40s. for the tender of silver.

This Act was repealed, but in substance re-enacted by the Coinage Act of 1870, and is still in principle and fact the law of the land and the basis of our monometallic system.

ENGLAND: 1816-93

From the date of its enactment England has been withdrawn from that action of bimetallic law which had been her bane for centuries. The flow of gold in or out became automatic, representing the natural flow of world-balances, and therefore proving the greatest trade help and indicator; and such commercial crises as have come upon her have arisen from the peculiarly sensitive organisation of credit which distinguishes the modern system, and are to be classed with banking rather than metallic currency phenomena.

The total coinage in England from 1816 to 1875 inclusive was £234,139,886 gold and £24,663,309 silver.

Year. Coinage of Gold. Imports of Gold Bullion and Specie. Exports of Gold Bullion and Specie.

1855 9,008,663 ? 11,847,000

1856 6,002,114 ? 12,038,000

1857 485,980 ? 15,062,000

1858 1,231,023 22,793,000 12,567,000

1859 2,649,509 22,298,000 18,081,000

1860 3,121,709 12,585,000 15,642,000

1861 8,190,170 12,164,000 11,238,000

1862 7,836,413 19,904,000 16,012,000

1863 6,607,456 19,143,000 15,303,000

1864 9,535,597 16,901,000 13,280,000

1865 2,367,614 14,486,000 8,493,000

1866 5,076,676 23,510,000 12,742,000

1867 496,397 15,800,000 7,889,000

1868 1,653,384 17,136,000 12,708,000

1869 7,372,204 13,771,000 8,474,000

1870 2,313,384 18,807,000 10,014,000

1871 9,919,656 21,619,000 20,698,000

1872 15,261,442 18,469,000 19,749,000

1873 3,384,568 20,611,000 19,071,000

1874 1,461,565 18,081,000 10,642,000

1875 243,264 23,141,000 18,648,000

1876 4,696,648 23,476,000 16,516,000

1877 981,468 15,442,000 20,374,000

1878 2,265,069 20,871,000 14,969,000

1879 35,050 13,369,000 17,579,000

1880 4,150,052 9,455,000 11,829,000

1881 ... 9,963,000 15,499,000

1882 ... 14,377,000 12,024,000

1883 1,403,713 7,756,000 7,091,000

1884 2,324,015 10,744,000 12,013,000

1885 2,973,453 13,377,000 11,931,000

1886 ... 13,392,000 13,784,000

1887 1,908,686 9,955,000 9,324,000

1888 2,277,424 15,000,000 14,250,000

1889 7,257,455 17,570,000 14,000,000

1890 7,662,898 23,900,000 14,250,000

1891 6,869,119 29,500,000 25,000,000

1892 13,944,963 21,250,000 15,450,000

1893 9,318,021 23,630,000 18,800,000

Year. Coinage of Silver. Imports of Silver Bullion and Specie. Exports of Silver Bullion and Specie.

1855 195,510 ? 6,981,000

1856 462,528 ? 12,813,000

1857 373,230 ? 18,505,000

1858 445,896 6,700,000 7,062,000

1859 647,064 14,772,000 17,608,000

1860 218,403 10,394,000 9,893,000

1861 209,484 6,583,000 9,573,000

1862 148,518 11,753,000 13,314,000

1863 161,172 10,888,000 11,241,000

1864 535,194 10,827,000 9,853,000

1865 501,732 6,977,000 6,599,000

1866 493,416 10,777,000 8,897,000

1867 193,842 8,021,000 6,435,000

1868 301,356 7,716,000 7,512,000

1869 76,428 6,730,000 7,904,000

1870 336,798 10,649,000 8,906,000

1871 701,514 16,522,000 13,062,000

1872 1,243,836 11,139,000 10,587,000

1873 674 12,988,000 9,828,000

1874 890,604 12,298,000 12,212,000

1875 594,000 10,124,000 8,980,000

1876 222,354 13,578,000 12,948,000

1877 420,948 21,711,000 19,437,000

1878 613,998 11,552,000 11,718,000

1879 549,054 10,787,000 11,006,000

1880 761,508 6,799,000 7,061,000

1881 997,128 6,901,000 7,004,000

1882 209,880 9,243,000 8,965,000

1883 1,274,328 9,468,000 9,323,000

1884 658,548 9,633,000 9,986,000

1885 720,918 9,434,000 9,852,000

1886 417,384 7,472,000 7,224,000

1887 861,498 7,819,000 7,807,000

1888 755,113 6,000,000 7,500,000

1889 2,215,742 9,000,000 10,500,000

1890 1,708,415 10,300,000 10,500,000

1891 1,049,113 10,500,000 11,800,000

1892 773,353 12,375,000 14,075,000

1893 1,089,707 11,320,000 13,532,000

United States

Under British dominion the American colonies retained the silver standard, as did their mother country, with such variation of actual coins and of their tariff as the situation of the country and the immense variety of metallic values prevailing in the different colonies gave rise to. The coin most commonly current was the Spanish piece of eight, but the system of weights and measures was the English system, and reckoning was by pounds, shillings, and pence. The method by which such a composite system was regulated consisted in those coinage tariffs with which early European monetary history is so well acquainted. According to a tariff issued in 1750, the ounce of silver was declared worth 6s. 8d. the Spanish milled piece of eight was to be equal to 6s.; and "whereas there is great reason to apprehend that many and great inconveniences may arise in case any coined silver or gold or English halfpence and farthings should pass at any higher rate than in a just proportion to Spanish pieces of eight, or coined silver at the ratio aforesaid," a tariff list was appended according to which the guinea was 28s., the English crown 6s. 8d., and so on for other European coins.

UNITED STATES: MORRIS'S SCHEME, 1782

In accordance with this system the earliest financial steps of the Continental Congress in 1775—its issues of bills of credit—were based upon, and the bills were declared payable in, the Spanish dollar or piece of eight, to which, on the report of a special commission, appointed on 19th April 1776, the various gold and silver coins circulating by different standards in different colonies were rated by a tariff. According to this tariff the guinea weighing 5 dwts. 8 grs. was to be equivalent to 4 2⁄3 dollars, and the English crown equal to 1 1⁄9 dollar.

Gold bullion was rated 17 dollars per oz. Troy weight; sterling silver at 1 1⁄9 dollar per oz.

Assuming the coins to be of full weight, the ratio here established is nearly the English ratio of 15.21. The ratio for bullion is slightly different, but hardly materially.

Six years later, at the request of a committee of Congress, the superintendent of finance, Robert Morris, submitted a scheme for a national coinage (15th January 1782). This scheme is remarkable for its clear-sightedness and grasp, as well as the testimony it bore to the European monetary system of the time. After deciding on silver as a necessary unit, the report thus proceeds:—

"The various coins which have circulated in America have undergone different changes in their value, so that there is hardly any which can be considered as a general standard unless it be Spanish dollars. These pass in Georgia at 5s., in North Carolina and New York at 8s., in Virginia and the four Eastern States at 6s., in all the other States except South Carolina at 7s. 6d., and in South Carolina at 32s. 6d."

As a common denominator, calculated from part of these figures, Morris proposed a monetary unit of 1⁄4-grain in fine silver, the multiples to be by the decimal system, the dollar containing 1440 units, and the Mint price of fine silver being 22,237 units per pound.

On the following 21st February 1782 Congress approved of the establishment of a Mint, and directed Morris to prepare and report a plan for conducting it.

In a concurrent paper of notes on the establishment of a money unit, and of a coinage for the United States, Jefferson proposed, in opposition to Morris's scheme, a decimal system resting on the dollar, and with a ratio of 15:1.

UNITED STATES: REPORT OF 1785

"Just principles," he says, after stating the legal ratio in the chief European countries, "will lead us to disregard legal proportions altogether, to inquire into the market price of gold in the several countries with which we shall be principally connected in commerce, and to take an average from them. Perhaps we might well safely lean to a proportion somewhat above par for gold, considering our neighbourhood and commerce with the sources of the coins, and the tendency which the high price of gold in Spain has to draw thither all that of their mines, leaving silver principally for our and other markets."

The settlement of the matter was, however, delayed, although in the course of the year Morris declared that "all our dollars are rapidly going to the enemy in exchange for light gold, which must eventually cause a considerable loss and a scarcity of silver which will be seriously felt."

In this undetermined state the matter rested till 13th May 1785, when the grand committee on the money unit made its report.

The proposed ratio was justified thus: "In France 1 grain of pure gold is counted worth 15 grs. of silver. In Spain 16 grs. of silver are exchanged for 1 of gold, and in England 15 1⁄5. In both England and Spain gold is the prevailing money, because silver is undervalued. In France silver prevails. Sundry advantages would arise to us from a system by which silver might become the prevailing money. This would operate as a bounty to draw it from our neighbours, by whom it is not sufficiently esteemed. Silver is not exported so easily as gold, and it is a more useful metal. Certainly our exchange should not be more than 15 grs. of silver for 1 of gold." The charge for coinage was to be 2 1⁄2 per cent. for gold, and slightly over 3 per cent. for silver. The unit was to be a dollar of 362 grs. of pure silver, with a multiple gold piece (5 dollars) and decimal aliquot pieces.

On the 6th July following, 1785, the Congress by vote adopted the silver dollar as the basis of the currency on a decimal system, but the resolution was not followed by the establishment of a Mint, although the States were experiencing great loss by the circulation of base copper coins made in Birmingham.

On the 8th April 1786, a report was made in triplicate by the Board of Treasury to the President of Congress, the first of the three forms of the report advocating a silver dollar of 375.64 grs. fine and a ratio of 15.256. These proposals were adopted by resolution on the 8th August following, and on the 16th October of the same year, 1786, the ordinance for the establishment of the Mint of the United States of America, and for regulating the value and alloy of coin, finally passed Congress.

In accordance with the resolutions of 8th August, the mint price of the pound Troy of gold (11 parts fine) was fixed at 209 dols. 7 dimes, 7 cents, and of silver at 13 dols. 7 dimes, 7 cents, and 7 mills.

The Mint charge here comprised is about 2 per cent. on both silver and gold, "bringing the ratio of bullion at the Mint to 15.22, a little below the ratio in the coin."

UNITED STATES: HAMILTON'S REPORT, 1791

For several years all these regulations of Congress were not put in force, and it was not until 5th May 1791 that the matter was again brought before the Senate by the report of the Secretary of the Treasury, Alexander Hamilton.

Hamilton's scheme, as contained in his most remarkable paper, was for a silver unit or dollar of 371 1⁄4 grs. of pure silver and a ratio of 15, and instead of the allowance of 2 per cent. for waste and coinage the principle was adopted of free coinage—of delivering at the Mint the same weight of pure metal coined as should be brought to it in bullion or foreign coin. Hamilton justifies his ratio thus: "The difference established by custom in the United States between coined gold and coined silver has been stated to be nearly 1:15.6. This, if truly the case, would imply that gold was extremely overvalued in the United States, for the highest actual proportion in any part of Europe very little, if at all, exceeds 1:15, and the average proportion throughout Europe is probably not more than 1:14.8." He also deduces his ratio of 15 as a mean between the two lately preceding issues of dollars. "Taking the rate of the late dollar of 374 grs., the proportion would be as 1:15.11. Taking the rate of the newest dollar of 374 grs., the proportion would be as 1:14.87. The mean of the two would give the proportion of 1:15 very nearly, less than the legal proportion in the coins of Great Britain, which is as 1:15.2, but somewhat more than the actual or market proportion, which is not quite 1:15." As to the express selection of one or other metal for the unit, Hamilton makes a departure which marks clearly that he was creating and not continuing a system, and that if bimetallism is a feature of modern conception that conception is due to American rather than French statesmanship:[18]—"Contrary to the ideas which have heretofore prevailed in the suggestions concerning a coinage for the United States, though not without much hesitation arising from a deference for those ideas, the secretary is, upon the whole, strongly inclined to the opinion that a preference ought to be given to neither of the metals for the monetary unit ... because this cannot be done effectually without destroying the office and character of one of them as money and reducing it to the situation of mere merchandise, which, accordingly, at different times, has been proposed from different and very reputable quarters, but which would probably be a greater evil than occasional variations in the unit, from the fluctuations in the relative value of the metals, especially if care be taken to regulate the proportion between them, with an eye to their average commercial value. To annul the use of either of the metals as money is to abridge the quantity of circulating medium."

UNITED STATES: SCHEME OF 1792

This scheme was accepted in its entirety by the Act of 2nd April 1792, with the slight change that the standard of silver was changed from 11⁄12 to 1 485⁄1664 fine. The silver dollar, therefore, weighed 416 grs. gross (371 1⁄4 grs. pure silver); on this basis, at a ratio of 15, the equivalent gold piece would contain 24.75 grs. (371 1⁄4/25 = 27 3⁄4). This was accordingly established as the basis of the gold eagle or ten-dollar piece, which was to contain 270 grs. gross (247.5 grs. pure gold).[19] The Act was followed by another on the 9th February 1793, for regulating the rate of foreign coins. The gold coins of Great Britain and Portugal of their then standard were made a legal tender for the payment of all debts and demands, at the rate of 100 cents for every 27 grs. of their actual weight, those of France and Spain at the rate of 100 cents for every 27 2⁄5 grains.

For a period the system established in 1792 went on, although the ratio established was prejudicial to gold. But, twenty years after, the natural result arrived in America, as in England, and the circulation of gold was completely extinguished in the States by the unseen withdrawal of the metal.

In obedience to a resolution of the Senate of 3rd March 1817, John Quincy Adams, Secretary of State, produced a report on weights and measures, in which he impugned the correctness of the data on which Hamilton had based his reckoning in 1791.

Two years later, 26th January 1819, a committee of the House reported an ill-considered scheme, recommending a change in the ratio in favour of gold, and the imposition of a heavy seigniorage on silver. On the 1st of March following, the House of Representatives directed the secretary to report such measures as might be expedient to procure and retain a sufficient quantity of gold and silver coin in the United States.

In this report, in referring to one feature in the previous crisis, namely, the necessity in 1814 for the suspension of specie payments, Secretary Crawford stated that, from the commencement of the war until that event of 1814, a large amount of specie was taken out of the United States by the sale of English Government bills, at a discount frequently of 15 to 20 per cent.

He concluded by suggesting a raising of the value of gold in relation to silver, 5 per cent., implying a ratio of 15.75.

In the report to the House of Representatives, dated 17th March 1832, quite a different statement was made, namely, that there was no export of gold from the United States from 1792 to 1821, and that "there were certainly no indications that gold was rated too low in our standard of 1:15 earlier than 1821, when the English demand commenced."

UNITED STATES: GOLD EXPORT OF 1820

The terms of the report of the committee on the currency, which was communicated to the House of Representatives on the 2nd February 1821, must be contrasted with this statement. "The committee are of opinion that the value of American gold compared with silver ought to be somewhat higher than by law at present established. On inquiry they find that gold coins, both foreign and of the United States, have in a great measure disappeared, and from the best calculation that can be made there is reason to apprehend they will be wholly banished from circulation, and it ought not to be a matter of surprise, under our present regulations, that this should be the case.... There have been coined at the Mint of the United States 6 millions of dollars in gold. It is doubtful whether any considerable portion of it can at this time be found within the United States.... It is ascertained that the gold coin, in an office of discount and deposit of the Bank of the United States in November 1819, amounted to 165,000 dollars and the silver coin to 118,000; that since that time the silver coin has increased to 700,000 dollars, while the gold coin has diminished to 1200 dollars, 100 only of which is American."[20]

The committee proposed a bill in the sense of their report, but for seven years—years of acute commercial crises and distress—no actual step was taken. In November of the following year the subject of the disappearance of gold from the currency was brought before the lower house of Congress by Mr. Lowndes. In December 1828, however, the Senate required the Secretary of the Treasury to ascertain the ratio and to state such alterations in the gold coins as might be necessary to conform those coins to the silver coins in their true relative value.

In his report Secretary Ingham insisted on the advantage of a single standard, but, in case of a determination to maintain both gold and silver, he proposed to approximate as near as could be to the French system by establishing a ratio of 15.625. In case of no change of the ratio he proposed to discontinue the gold coinage, whenever the premium for gold should exceed 2 per cent.

No action was taken on these reports, nor on the similar proceedings in the two following years, nor very little more on the report which in June 1832 the select committee on coins produced. Part of the instructions given to this committee were "to inquire into the expediency of making silver the only legal tender, and of coining and issuing gold coins of a fixed weight and fineness, which shall be received in payment of all debts to the United States, at such ratio as may be fixed from time to time but shall not otherwise be a legal tender."

In the House of Representatives the converse proposition of a gold standard with a restricted legal tender had been made by M. Wilde, 26th March 1832, but when the report appeared it advocated a silver standard.

UNITED STATES: THE ACT OF 1834

While Congress was thus delaying over a vital question the New York bankers, May 1834, pressed for the regulation of the gold coins, so as to retain them in the country.

Two months later, 31st July 1834, the long-sought measure passed, but in an extraordinary form. At a blow the ratio was changed from 1:15 to 1:16 (15.988), by the reduction of the weight of the fine gold in the gold coins to 23.20 Troy grains, soon afterwards, by an Act of 18th July 1837, changed to 23.22 grains, the standard being changed at the same time from 11⁄12 to 9⁄10 fine.

The motives and amount of wisdom which underlay this sudden close of a long period of agitation can be measured from Benton's own words, in his Thirty Years' View:—

"A measure of relief was now at hand, before which the machinery of distress was to balk and cease its long and cruel labours—it was the passage of the bill for equalising the value of gold and silver and legalising the tender of foreign coins of both metals. The bills were brought forward in the House by Mr. Campbell H. White of New York, and passed after an animated contest in which the chief question was as to the true relative value of the two metals, varied by some into a preference for National Bank paper; 15 5⁄8 was the ratio of nearly all who seemed best calculated from their pursuits to understand the subject. The thick array of speakers was on that side, and the eighteen banks of the city of New York, with Mr. Gallatin at their head, favoured that proportion. The difficulty of adjusting this value, so that neither metal should expel the other had been the stumblingblock for a great many years, and now this seemed to be as formidable as ever. Refined calculations were gone into, scientific light was sought, history was rummaged back to the times of the Roman Empire; and there seemed to be no way of getting to a concord of opinion either from the light of science, the voice of history, or the result of calculations. The author of this View had, in his speeches on the subject, taken up the question in a practical point of view, regardless of history and calculations and the opinions of bank officers; and looking to the actual and equal circulation of the two metals in different countries he saw that this equality and actuality of circulation had existed for above three hundred years in the Spanish dominions of Mexico and South America, where the proportion was 16:1. Taking his stand upon this single fact, as the practical test which solved the question, all the real friends of the gold currency soon rallied to it. Mr. White gave up the bill which he had first introduced, and adopted the Spanish ratio. Mr. Clowney of South Carolina, Mr. Gillet, and Mr. Cambreleng of New York, Mr. Ewing of Indiana, Mr. McKim of Maryland, and other speakers gave it a warm support. Mr. John Quincy Adams would vote for it, though he thought the gold was overvalued, but if found to be so the difference could be corrected hereafter. The principal speakers against it and in favour of a lower rate were Messrs. Gorham of Massachusetts, Selden of New York, Binney of Pennsylvania, and Wilde of Georgia, and eventually the bill was passed by a large majority, 145 to 35. In the Senate it had an easy passage. Messrs. Calhoun and Webster supported it, Mr. Clay opposed it; and on the final vote there were but seven negatives—Messrs. Chambers of Maryland, Clay, Knight of Rhode Island, Alexander Porter of Louisiana, Silsbee of Massachusetts, Southard of New Jersey, Sprague of Maine. The good effects of the bill were immediately seen. Gold began to flow into the country through all the channels of commerce, old chests gave up their hordes, the Mint was busy; and in a few months, as if by magic, a currency banished from the country for thirty years overspread the land and gave joy and confidence to all the pursuits of industry."

The panacea thus magnificently lauded soon proved itself worse than inefficient. The ratio was too high, and the silver dollars could not be maintained. They were unduly exported, especially between the years 1848 and 1851. And in order to retain within the country a sufficient amount of small coin the amount of silver in the small coins, from the half-dollar downwards, was reduced by an Act of 24th February 1853. It was at the same time provided that they should be coined only on Government account, and they were made legal tender only up to the sum of five-dollars.

The direction of this step will be seen at a glance—it was in the direction of the gold valuation. This is as plainly the case as it was in the Latin Union, already exemplified (p. 190). Further, it was so conceived and explicitly stated by Dunham, who piloted the bill through the House. "We have had," he said, "but a single standard for the last three or four years. That has been and now is gold. We propose to let it remain so, and to adapt silver to it, to regulate it by it." Legally, the old silver dollar was left untouched, and the gold and silver valuation was not expressly abolished. No reference whatever was made to the silver dollar in the Act, for the simple reason that for years nothing had been seen of them. They did not and could not circulate. There was plenty of gold, and the absence of silver with the change in standard therein practically implied was either unnoticed, or regarded, if at all, only with indifference.

The final step in the simplification and unification of this system was commenced in 1870, when a bill was prepared for a revised coinage law with a pure gold standard, silver being demonetised as a legal tender money. The bill did not become law till 12th April 1873. And no opposition was expressed in either the House of Representatives or the Senate to the abolition of the double standard. The silver dollars previously coined (of which, however, but few were in existence) maintained their quality as legal tender; but the coining of new dollars, whether on Government or private account, was forbidden.

UNITED STATES: THE LEGISLATION OF 1873-74

This Act was therefore simply the complement of the preceding legislation of 1853.

The completion of this system thus established was provided in section 3586 of the Revised Statutes of 1874, by which the silver coins of the United States were declared legal tender only up to five dollars, thus completing, from December 1873 onwards, the demonetisation of silver, and the establishment of gold monometallism on the English plan. As an effective scheme it meant little because of the prevalence of paper.

Within a very short time of the passing of this bill, however, began the great change in the relative value of the precious metals which has continued since. The silver-producing interest, at that moment on the eve of receiving an enormous accession of strength by the Nevada finds, made itself heard. At the same time the prospect of the resumption of cash payments brought an additional incentive and interest. A commission to investigate the question of standard was therefore appointed, 14th August 1875, and a majority of this commission recommended the establishment of the double standard. Thereupon Bland, one of the members of the commission, proposed in the House of Representatives the re-establishment of the double standard, at the old ratio of 1:15.988, with free coinage of silver.

The question of resumption was pressing near. On the 1st January 1879 the States were to return to cash payments. On what basis should that return be effected? Should the Act of 1873 be maintained, or should a return be made to the bimetallic system which had prevailed before then? The Government was of the former opinion; the majority of Congress of the latter.

The silver party, finding the measure could not be carried over the veto of the president, agreed to a compromise, under which the free coinage clause was dropped, and it was as a compromise that the Bland Act so-called, the "Act to authorise the coinage of the standard silver dollar, and to restore its legal tender character," passed on the 28th February 1878.

To the favourers of a gold system it was conceded that in the maintenance of the previous legal ratio of 15.988, the silver dollar should be reserved for Treasury reckonings, and a maximum minting limit of 4 million dollars monthly should be fixed. The bimetallists gained the fixing of a minimum limit of 2 million dollars monthly of silver coinage, and the clause enjoining the President of the United States to take steps for the meeting of an international conference.

UNITED STATES: BLAND AND SHERMAN ACTS

This scheme became law immediately, and on the 1st January 1879 the United States resumed specie payment. As far as the actual circulation of the country is concerned this return is only nominally effective. The habit of employing redeemable paper had grown too strong and continuous, and even the rule of the New York banking-houses, to employ only gold in clearing-house settlements, has been formally, though not absolutely, abolished by the Act of Congress of 12th July 1882, which provided that no national bank should be a member of a clearing-house at which gold and silver certificates were not accepted in payment of balances. The Bland Bill deceived the hope of both parties, as such a compromise might be expected to do. It remained in force, notwithstanding, till August 1890, and during the twelve years, 1878-1890, the United States coined a matter of 370 million silver dollars, employing therein 9 million kilogrammes of silver—a third of the total contemporary production.

Almost yearly, up to 1887, the repeal of the silver purchase clauses of the Bland Bill and the suspension of the silver coinage was recommended to Congress by presidential message, and in the reports of the Secretary of the Treasury.

In December 1889 President Harrison and Secretary Windam definitely proposed to cease the coining of silver, and to limit the issues of silver certificates to the value of the silver bullion as deposited, reckoning that value at its then market price. From these proposals sprang, by the same peculiar process of committee gestation which had produced the Bland Act, the compromise which passed on the 14th July 1890, under the title of the Sherman Act.

This act represents a compromise not of principles but of self-seeking interests. The main regulations of the law, which came into force on the 13th August 1890, were:—

1. The Secretary of the Treasury is to purchase silver to not more than the monthly amount of 4,500,000 oz. at the market price, so long as that price is below 129.29 cents per oz.

2, 3. To issue Treasury notes against the purchases, the said notes to be full legal tender, and capable of forming part of bank reserves.

5. Up to 1st July 1891, 2 million oz. monthly of this silver to be coined into dollars. That coinage to cease after the date specified, except so far as necessary to secure the Treasury notes. At the same time the Act declares the intention of the American Government to preserve the parity of gold and silver.

The fillip given by this legislation to the price of silver was over in a moment, and almost immediately the question recurred for pressing consideration, on the strong demand of the silver party for free coinage in place of these as yet ineffectual purchase schemes. The impotent close of the international monetary conference at Brussels, in February 1893, was followed by the Act of the Governor-General of India in Council of June 26th closing the Indian Mint to the free coinage of silver. Left practically alone in her stand in defence of silver, America, in the simple interest of her gold reserve, was obliged to abandon the field, and after a bitter fight the repeal of the clauses of the Sherman Act, which had enacted the compulsory purchase of silver, was carried in November 1893.

UNITED STATES: COINAGE 1793-1893

We are too near the event to estimate these later developments of the situation, but as yet two remarkable facts have hinged upon this report—(1) the immediate depreciation of the value of silver and the effect on the export of silver to India were not such as might a priori have been conjectured; (2) the ceasing of the silver purchase deprived the currency of the United States of its only remaining element capable of expansion, and of all the countries of the world the United States stands most in need of an expanding and expansible currency.

COINAGE OF THE MINTS OF THE UNITED STATES.

[21]

Years. Gold (Dollars). Silver (Dollars). Years. Gold (Dollars). Silver (Dollars).

1793-5 71,485.00 370,683.80 1813 477,140.00 620,951.50

1796 77,960.00 77,118.50 1814 77,270.00 561,687.50

1797 128,190.00 14,550.45 1815 3,175.00 17,308.00

1798 205,610.00 330,291.00 1816 ... 28,575.75

1799 213,285.00 423,515.00 1817 ... 607,783.50

1800 317,760.00 224,296.00 1818 242,940.00 1,070,454.00

1801 422,570.00 74,758.00 1819 258,615.00 1,140,000.00

1802 423,310.00 58,343.00 1820 1,319,030.00 501,680.70

1803 258,377.50 87,118.00 1821 189,325.00 825,762.45

1804 258,642.50 100,340.50 1822 88,080.00 805,806.50

1805 170,367.50 149,388.50 1823 72,425.00 895,550.00

1806 324,505.00 471,319.00 1824 93,200.00 1,752,477.00

1807 437,495.00 597,448.75 1825 156,385.00 1,564,583.00

1808 284,665.00 684,300.00 1826 92,245.00 2,002,090.00

1809 169,375.00 707,376.00 1827 131,565.00 2,869,200.00

1810 501,435.00 638,773.50 1828 140,145.00 1,575,600.00

1811 497,905.00 608,340.00 1829 295,717.50 1,994,578.00

1812 290,435.00 814,029.50 1830 643,105.00 2,495,400.00

Years. Gold (Dollars). Silver (Dollars). Years. Gold (Dollars). Silver (Dollars).

1831 714,270.00 3,175,600.00 1863 22,445,482.00 809,267.80

1832 798,435.00 2,579,000.00 1864 20,081,415.00 609,917.10

1833 978,550.00 2,759,000.00 1865 28,295,107.50 691,005.00

1834 3,954,270.00 3,415,002.00 1866 31,435,945.00 982,409.25

1835 2,186,175.00 3,443,003.00 1867 23,828,625.00 908,876.25

1836 4,135,700.00 3,606,100.00 1868 19,371,387.50 1,074,343.00

1837 1,148,305.00 2,096,010.00 1869 17,582,987.50 1,266,143.00

1838 1,809,765.00 2,333,243.40 1870 23,198,787.50 1,378,255.50

1839 1,376,847.50 2,209,778.00 1871 21,032,685.00 3,104,038.30

1840 1,675,482.50 1,726,703.00 1872 21,812,645.00 2,504,488.50

1841 1,091,857.50 1,132,750.00 1873 57,022,747.50 4,024,747.60

1842 1,829,407.50 2,332,750.00 1874 35,254,630.00 6,851,776.70

1843 8,108,797.50 3,834,750.00 1875 32,951,940.00 15,347,893.00

1844 5,427,670.00 2,235,550.00 1876 46,579,452.50 24,503,307.50

1845 3,756,447.50 1,873,200.00 1877 43,999,864.00 28,393,045.50

1846 4,034,177.50 2,558,580.00 1878 49,786,052.00 28,518,850.00

1847 20,202,325.00 2,374,450.00 1879 39,080,080.00 27,569,776.00

1848 3,775,512.00 2,040,050.00 1880 62,308,279.00 27,411,693.75

1849 9,007,761.50 2,114,950.00 1881 96,850,890.00 27,940,163.75

1850 31,981,738.50 1,866,100.00 1882 65,887,685.00 27,973,132.00

1851 62,614,492.50 774,397.00 1883 29,241,990.00 29,246,968.45

1852 56,846,187.50 999,410.00 1884 23,991,756.50 28,534,866.15

1853 39,377,909.00 9,077,571.00 1885 27,773,012.50 28,962,176.20

1854 25,915,962.50 8,619,270.00 1886 28,945,542.00 32,086,709.90

1855 29,387,968.00 3,501,245.00 1887 23,972,383.00 35,191,081.40

1856 36,857,768.50 5,142,240.00 1888 31,380,808.00 33,025,606.45

1857 32,214,540.00 5,478,760.00 1889 21,413,931.00 35,496,683.15

1858 22,938,413.50 8,495,370.00 1890 20,467,182.50 39,202,908.20

1859 14,780,570.00 3,284,450.00 1891 29,222,005.00 27,518,856.00

1860 23,473,654.00 2,259,390.00 1892 34,787,222.50 12,641,078.00

1861 83,395,530.00 3,783,740.00 1893 56,997,020.00 8,802,797.30

1862 20,875,997.50 1,252,516.50

UNITED STATES: MOVEMENTS OF METALS, 1851-1893

IMPORT AND EXPORT OF THE PRECIOUS METALS INTO AND FROM THE UNITED STATES.

Gold and Silver.

Import (Dollars). Export (Dollars).

Yearly average,1851-55 5,151,817 39,432,522

" 1856-60 10,385,770 59,589,841

" 1861-63 24,112,923 43,611,777

Gold.

Import (Dollars). Export (Dollars).

Yearly average,1864-70 11,117,584 58,757,484

" 1871 6,883,561 66,686,208

" 1872 8,717,458 49,548,760

" 1873 8,682,447 44,856,715

" 1874 19,503,137 34,042,420

" 1875 13,696,793 66,980,977

" 1876 7,992,709 31,177,050

" 1877 26,246,234 26,590,374

" 1878 13,330,215 9,204,455

"1879 5,624,948 4,587,614

" 1880 80,758,396 3,639,025

" 1881 100,031,259 2,565,132

" 1882 34,377,054 32,587,880

" 1883 17,734,149 11,600,888

" 1884 22,831,317 41,081,957

" 1885 26,691,696 8,477,892

" 1886 20,743,349 42,952,191

" 1887 42,910,601 9,701,187

" 1888 43,934,317 18,376,234

"1889 10,284,858 59,951,685

" 1890 12,943,342 17,274,491

" 1891 45,298,928 79,187,499

" 1892 18,165,056 76,735,592

" 1893 73,280,575 80,010,633

Silver.

Import (Dollars). Export (Dollars).

Yearly average, 1864-70 5,469,798 16,818,279

" 1871 14,382,463 31,755,780

" 1872 5,026,231 30,328,774

" 1873 12,798,490 39,751,859

" 1874 8,951,769 32,587,985

" 1875 7,203,924 25,151,165

" 1876 7,943,972 25,329,252

" 1877 14,528,180 29,571,863

" 1878 16,491,099 24,535,670

" 1879 14,671,052 20,409,827

"1880 12,275,914 13,503,894

" 1881 10,544,238 16,841,715

" 1882 8,095,336 16,829,599

" 1883 10,755,242 20,219,445

" 1884 14,594,945 26,051,326

" 1885 16,550,627 33,753,633

" 1886 17,850,307 2,954,219

" 1887 17,260,191 26,296,504

" 1888 15,403,189 28,027,949

" 1889 18,678,215 36,689,248

"1890 21,032,984 34,873,929

" 1891 27,910,193 28,783,393

" 1892 31,450,968 37,541,301

" 1893 27,765,696 47,463,399

In 1878 the currency total of America was thus composed:—

1878. 1879.

Gold (dollars), 82,500,000 123,700,000

Silver (dollars), ... 11,100,000

Silver (small coin), 53,600,000 54,100,000

Gold Certificates, 44,400,000 14,800,000

Silver Certificates, ... 12,000,000

State Notes, 311,400,000 327,700,000

Notes of the National Banks, 313,900,000 330,000,000

Totals, 805,800,000 862,600,000

In 1893—

Metallic.

1893.Dollars.

Gold bullion,84,631,966

Silver bullion,128,479,587

Gold coin,582,366,998

Silver dollars,419,332,777

Subsidiary silver coins,76,267,586

1,291,078,914

Paper.

Legal tender notes (old issue),346,681,016

Legal Tender Notes Act, 14th July 1890,153,160,151

Gold certificates,77,487,769

Silver certificates,334,584,504

National Bank notes,208,538,844

Currency certificates,39,085,000

1,159,537,284

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

Netherlands.

During the eighteenth century the monetary history 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 the Appendix (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 William I. 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 15 1⁄2.

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 47 1⁄2 cents, 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 old money 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 172 1⁄2 millions 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 by 1⁄10 of 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 85 1⁄4 millions 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 been coined, 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 were Guillaumes d'or, double- and half-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 at 104 fl. 65 cents.

Bank retained for recoinage, etc 1 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 an attempt 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

Portugal.

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. 11⁄12 fine) 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 International Conferences.

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 monetary system 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, the conference 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 the Enquête of 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 generally in 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 46 3⁄4 per 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 the coinage 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 circumstance gave 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 of silver in 1878 had been 52 9⁄16, in 1881 it was 51 11⁄16: 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 round the 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.