Cyclopædia of Political Science, Political Economy, and the Political History of the United States

Edited by: Lalor, John J.
(?-1899)
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1881
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New York: Maynard, Merrill, and Co.
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1899
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Includes articles by Frédéric Bastiat, Gustave de Molinari, Henry George, J. B. Say, Francis A. Walker, and more.
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PARIS MONETARY CONFERENCE

III.29.1

PARIS MONETARY CONFERENCE. Under this title will be given a sketch of the three international monetary conferences held in the city of Paris in the years 1867, 1878 and 1881. Bimetallism in the abstract having been considered in the article on MONEY, that subject will be treated here only in the narrative form as it was presented in the discussions of the conferences.

III.29.2

Conference of 1867. This conference was brought together on the invitation of the French government, which was moved thereto by the successful conclusion of the treaty of Dec. 23, 1865, between France, Belgium. Italy and Switzerland, constituting what is commonly known as the Latin monetary union. The letter of invitation transmitted by the French government inclosed a copy of this treaty, and suggested the holding of an international conference "to consider the question of uniformity of coinage and to seek for the basis of ulterior negotiations." The conference assembled June 17, under the presidency of Marquis de Moustier, minister of foreign affairs, the following named countries being represented: Austria, Baden, Bavaria, Belgium, Denmark, the United States, France, Great Britain, Greece, Italy, The Netherlands, Portugal, Prussia, Russia, Sweden and Norway, Switzerland, Turkey, and Würtemberg. The United States were represented by Mr. Samuel B. Ruggles of New York, and Great Britain by Mr. Thomas Graham and Mr. Rivers Wilson. The most eminent of the French representatives, as an economist and financier, was Mr. E. de Parieu. A committee was appointed to formulate the work of the conference.

III.29.3

—At the second session (June 19) the committee reported a "questionnaire" or series of interrogatories to be debated by the conference. These were twelve in number, all having relation to the possibility of establishing a universal monetary unit, either by adopting some existing unit or by making a new one approximating to existing units, and to the means of securing the practical adoption of the same. The conference voted unanimously against the adoption of an entirely new system, and in favor of "the mutual co-ordination of existing systems."

III.29.4

—At the third session a vote was taken on the question whether the standard of the proposed unit should be silver exclusively. It was decided in the negative unanimously. When this vote was taken, Mr. Feer-Herzog (Switzerland) noted it as a fact of much significance, that the representatives of Prussia and Sweden, countries having the silver standard, should have voted in effect in favor of the gold standard. The conference then voted unanimously (with the exception of The Netherlands) in favor of the single gold standard, "leaving each state the liberty to keep its silver standard temporarily."

III.29.5

—At the fourth session, on the motion of Baron de Hock (Austria), the conference voted that the advantage of internationality, which the proposed gold unit would have, would not be sufficient to keep the coins in circulation in states having the silver standard or the double standard, unless suitable measures should be adopted regarding the ratio between the two metals.

III.29.6

—At the fifth session (which was presided over by Prince Napoleon) the question, what unit should be adopted, came up for discussion. Mr. Rivers Wilson, on behalf of Great Britain, read a paper saying that his government had been glad to participate in the conference, regarding it as a means of enlightening public opinion on an important question, but could not hold out the expectation that it would abandon its own monetary unit or assimilate it to that of any continental system. The conference voted that an international coinage should consist of "types with a common denominator for weight, in gold coins of identical fineness," and that the fineness should be nine-tenths.

III.29.7

—At the sixth session the conference voted by thirteen to two in favor of the five-franc gold piece (equal to 96½ cents) as the common denominator. England and Sweden voted against this proposition; Prussia, Bavaria, Baden, Würtemberg and Belgium did not vote. It was voted also that gold coins with the common denominator of five francs should have legal circulation in the countries agreeing to the action of the conference, and that it would be expedient to coin gold pieces of the dimensions of twenty-five francs for international circulation.

III.29.8

—At the seventh session it was voted to refer the decisions of the conference to the several states for diplomatic action; that the answers of the several states should be transmitted to the French government, which should have power to reassemble the conference; and that it was desirable that the answers should be received before Feb. 15, 1868. The conference adjourned July 6, and was not reassembled.

III.29.9

Conference of 1878. By the coinage revision act of Feb. 12, 1873, the gold dollar of twenty-five and eight-tenths grains nine-tenths fine was declared to be the unit of value in the United States, and the silver dollar was omitted from the list of coins authorized to be struck at the mint. By the act of Feb. 28, 1878, the silver dollar was restored to the list of coins and made full legal tender, and the secretary of the treasury was directed to purchase silver bullion and coin into such dollars not less than two million dollars' worth, and not more than four million dollars' worth per month. By the same act the president was directed to invite the governments of Europe "to join in a conference to adopt a common ratio between gold and silver for the purpose of establishing internationally the use of bi-metallic money and securing fixity of relative value between those metals." That portion of the act of 1873 which made the gold dollar the unit of value was not altered by the act of 1878.

III.29.10

—The conference assembled in Paris, Aug. 16. Delegates were appointed by Austria-Hungary, Belgium, France, Great Britain, Greece, Italy, The Netherlands, Russia, Sweden and Norway, Switzerland, and the United States. Mr. Mees (The Netherlands), Mr. Brock (Norway), Mr Feer Herzog (Switzerland), and Mr. Delyanni (Greece) had been members of the conference of 1867. The representatives of the United States were Reuben E. Fenton of New York. W. S. Groesbeck of Ohio, and Francis A. Walker of Connecticut, with S. Dana Horton as secretary, Mr. Horton being admitted to the conference as a member. Great Britain was represented by the Rt. Hon. Geo. J. Goschen, Mr. Henry Hucks Gibbs, Sir Thos. L. Seccombe, and Mr. Wm. B. Gurdon. The most distinguished representative of France was Léon Say, minister of finance. Germany declined to send delegates. No action was taken at the first session beyond the election of Léon Say as president.

III.29.11

—At the second session Mr. Groesbeck, on behalf of the United States, offered two propositions for the consideration of the conference: 1, That it is not to be desired that silver be excluded from free coinage in Europe and the United States; 2d, That the use of both gold and silver as unlimited legal tender may be safely adopted by equalizing them at a ratio fixed by international agreement. Mr. Groesbeck said that that portion of the law of 1873, by which the silver dollar was made to disappear from the coinage, had been passed through inadvertence rather than intentionally, and that the United States, although desiring to restore silver to absolute equality with gold, had been compelled to limit the coinage of silver on account of the market value of the metals, and also by reason of the action of the Latin Union restricting the coinage of silver. Mr. Goschen and Mr. Gibbs inquired what was to be understood by the "inadvertence" of the act of 1873, and whether that act had been passed without debate. Mr. Groesbeck replied that "no newspaper or chamber of commerce" had considered or recommended the bill, and that several members of congress had confessed to him that they did not know at the time what they were doing. Mr. Feer-Herzog said that silver had disappeared from circulation in the United States long before the act of 1873 was passed, that there had been only eight millions of silver dollars coined from the beginning of the government down to that time, and that he had documents which he would lay on the table showing that the section of the law of 1873, by which the silver dollar was made to disappear from the coinage of the United States, was not passed by inadvertence, but voluntarily and with reflection, and determination to establish the single gold standard, which was in fact, and had for a long time been in practice, the standard of the country. Mr. Walker said that he himself, although at that time occupying a chair of political economy and lecturing on money, was not aware of what was being done, and he presumed the great majority of his fellow citizens were equally ignorant. The president (M. Say) said that Mr. Groesbeck's observation that the action of the Latin Union restricting the coinage of silver had been one of the motives impelling the United States to restrict it also, did not seem to be well founded. It seemed to him that this restriction was a compromise effected in congress by means of which a majority could be obtained. Mr. Horton replied that the Bland bill had been introduced in 1876, and that between that time and the passage of the silver remonetization act the subject had been discussed in all its phases, and that the action of the Latin Union had not been overlooked in the discussion. Mr. Pirmez (Belgium) said that the real question before the conference was whether the double standard should be made universal. His country could not do otherwise than reject such a proposition, whose immediate result would be to give enormous profits to speculators in the metals by withdrawing the one and substituting the other with every change of market value. Count Rusconi (Italy) thought the conference might pronounce upon the question of principle: "Is it possible to establish a fixed relation between gold and silver?" and then, if it be decided affirmatively, consider the means to establish such ratio. Mr. Broch (Norway) said that the double standard was a delusion and a misnomer; there was no such thing anywhere. Countries having the double standard in law had the gold standard in fact to-day and the silver standard to-morrow, but the double standard never. Silver, by reason of its weight and bulk, was not adapted to the wants of civilized countries and an active circulation. Gold alone responded to those needs. Silver was suited only to countries which were backward or stationary. Even if all European countries could be persuaded to adopt the double standard, the influence of India and China would produce incessant perturbations and fluctuations by alternate importations and exportations of silver. Mr. de Thoerner (Russia) believed that it was opposed to the very nature of things to endeavor to establish a fixed relation between the value of silver and that of gold. After some further discussion it was resolved, on the motion of Count Rusconi, that an invitation be extended to the German government, in the name of all the delegates, to send representatives to the conference.

III.29.12

—At the third session Mr. Goschen said that England could not adopt the double standard, but that she had, nevertheless, so large an interest in the question under discussion, through her Indian possessions, that she could not fail to give her aid and co-operation in any intelligent movement to arrest the fall of silver. If all states should resolve on the adoption of the gold standard, and if Italy. Austria and Russia should resume specie payments, would there be sufficient gold for the purpose without a tremendous crisis? It was better for the world at large that the two metals should continue in circulation than that one should be universally substituted for the other. The conference could not adopt the American proposition, but efforts might be made in other directions to check the downward course of silver by making some definite disposition of the German surplus, estimated at $75,000,000. If, for instance, this could be taken into the United States treasury in place of an equal amount of gold, it would no longer weigh on the market. Mr. von Hengenmuller (Austria-Hungary) said that Austria was attached to the principle of the double standard, and in theory must subscribe to the American proposition, but unfortunately the advantage of it depended upon its general adoption, which was not to be looked for. His government was, therefore, compelled to maintain an attitude of expectancy. If the conference were asked to formulate its opinions on the American proposition he should, however, vote in favor of it. Mr. Mees said that so long as England and Germany adhered to the single gold standard it would be impossible for Holland to adopt another system. There was not, at the present time, a single state in Europe where the coinage of silver was free, not even among those which have theoretically the silver standard or the double standard. The United States might, nevertheless, find powerful allies in Asia and South America, as well as among those countries of Europe which are still under the régime of paper money. The general demonetization of silver undertaken everywhere at once, would have the most fatal consequences. The president (M. Say) explained the monetary position of France. In closing her mint against silver, the government had no intention of moving toward the single gold standard. France had about twenty-five hundred million francs in silver, of which nine hundred millions were in the vaults of the bank. To demonetize such a mass and throw it on the market was inadmissible. But to hold the mint open to take a further indefinite quantity at the ratio of fifteen and one half to one, especially when it was known that Germany had fifteen or seventeen million pounds sterling in hand ready to sell, was impossible. Hence, the attitude of France was that of expectancy. France was waiting to get clearer ideas of the causes of the depreciation of silver, and to see what disposition was to be made of the German stock. She held herself in readiness to adopt the single gold standard or to revert to the double standard, according to circumstances. She could vote readily for the first clause of the American proposition, that it is not to be desired that silver be excluded from free coinage in Europe and the United States. She could vote also that silver already coined and holding the legal tender character ought to be maintained in that character, but could not acquiesce in the other clauses of the American proposition, although at some future time, when the atmosphere should be cleared, she might be able to do so. Mr. Delyanni said that the position of Greece was identical with that expressed by M. Say on behalf of France. Mr. Feer-Herzog was not able to coincide with other speakers in giving such prominence and gravity to the unsold stock of silver in the German treasury as a disturbing cause in the market. This stock was only equal to one year's supply from the mines, or to the demand from India last year. The commerce of India was the greatest factor in the silver market, the production of the mines the next greatest, while the German monetary reform could only be counted as the third in importance. He disclaimed for himself and other adherents of the single gold standard the thought of suppressing silver money. He merely desired that it should take its natural and proper place as the money of the less advanced portions of mankind, while gold should take its place as the money of a higher civilization. It was the persistent fall of silver, showing itself as a constant fact, which had led governments, even against their will, to adopt the single gold standard. Switzerland had given her delegates no authority to agree to the adoption of the ratio of sixteen to one, or any other ratio between silver and gold. Count Rusconi did not consider it impossible to establish a stable relation between silver and gold. Law alone, he said, makes money. If the uncoined metal was subject to variations of the market, the coined metal, having legal tender power, had a price which did not vary. It had the power of paying obligations which the uncoined metal did not possess. The metal might change in value, but the coin did not change. It had, actually and effectively, the value which was indicated by the imprint. Mr. Brock could not share in the opinions which had been expressed concerning the quantity of gold which would be required to enable those countries now under the paper régime to resume specie payments. In his opinion more silver would be required than gold; for those countries would not discard their note issues when they should resume, but the fractional notes would be retired and silver coin would take their place in the hands of the people. Norway and Sweden were on the gold basis, but scarcely any gold was seen. The circulation consisted of notes and silver. So it would be in Italy and Austria and the United States after resumption. Specie resumption in the United States would necessarily be in gold. The coinage of silver dollars under the limitations of the present law would do no harm for a long time. The dollars would circulate at par with gold so long as they were not in excess. But a time would come, especially if they should adopt unlimited coinage, when the two would not circulate at par with each other. The power of the United States, or of all the nations of Europe together, would not suffice for the struggle against the balance of international trade, or to change the terms of the balance. He agreed with the delegate from Switzerland that the greater or less demand for silver in India was the governing factor of the silver problem. In other words, it was the condition of trade between Europe and Asia that determined from time to time the relative values of silver and gold. Holding this opinion, he did not believe that the means proposed by the United States to secure fixity of value between the two metals would have the results which they expected from it, even if accepted by all Europe. Nevertheless, he had the most profound respect for the motives which led to the calling of this conference, and he believed that great good would result from the interchange of views, even if no resolution should be adopted.

III.29.13

—At the fourth session, the president said that the German government had replied, through Prince Hohenlohe, to the invitation to send delegates to the conference by expressing thanks for the invitation, and regretting its inability to accede to the wishes of the conference. Mr. Walker replied to the remarks of Mr. Feer Herzog at the previous session. Silver, he said, had not ceased to be money in Europe through natural causes, but by the action of man, by political action, by laws and decrees of governments suggested and urged by political economists of a certain school. The action of Germany in 1871, involving important changes in the policy of the Latin Union, was wholly gratuitous, not suggested by any commercial exigency. It was taken under bad advice, with little or no consideration as to the general effects upon the production of wealth which would be wrought by so great a diminution of the money supply of the world. Mr. Feer-Herzog had said that he expected and desired to see the world divided into gold countries and silver countries, the former civilized, the latter uncivilized. He (Mr. Walker) affirmed that "there are not more than three territorially extensive countries in the world which could possibly maintain a single gold standard upon true economic principles." A diminution of the money supply was one of the gravest evils that could menace mankind. Whether the money supply of Europe should be reduced by silver demonetization 40, 30 or only 20 per cent., the consequences would be most disastrous. "Suffocation, strangulation, are words hardly too strong to express the agony of the industrial body when embraced in the fatal coils of a contracting money supply." Against so great a wrong to civilization and to the hopes of mankind, the representatives of the United States were here to raise their earnest protest and warning. The interest of the United States in this question as a silver producing country, was utterly insignificant as compared with their interest in it as it stands related to trade and industry in general. Mr. Waern (Sweden), thought it right to reply to so much of Mr. Walker's speech as implied that only the richest nations would be able to obtain and keep gold sufficient for their needs under the single gold standard. Sweden was a country very inferior in wealth, and she had adopted the single gold standard in 1873, yet she had experienced no difficulty upon this score. She had found all the gold she needed as the basis of her fiduciary circulation, and she had had no difficulty in retaining it. Mr. Horton replied to Mr. Feer Herzog's historical citations, and especially to his statement that England, in adopting the single gold standard in the year 1816, had simply conformed the law to what had been the practice for nearly a century. The English gold standard law, said Mr. Horton, really dated from 1798. Much of the monetary confusion which England suffered between 1798 and 1821 was to be attributed to this unwise proceeding. Mr. Horton thought that the conference was diverging into collateral discussions, and that it would be better to adhere to the real question suggested by the United States government, viz.: Is it in the interest of nations to wage a monetary war, each seeking to get rid of a falling metal? or ought they to unite together to give to the monetary basis of business a stability which it does not now possess? If the conference should separate without answering this question it would have left only an interrogation point at the end of its labors. Mr. Baralis (Italy) urged that a sub-committee be appointed to consider and report upon the subject of an international coinage. The president thought it was better to pursue the discussion of the American propositions till a definite conclusion should be arrived at. Mr. Feer-Herzog, replying to Mr. Horton's statement of the real question before the conference, said that, if England were asked to establish a fixed ratio between the rupee and the sovereign, she would refuse to do so. If Holland were asked to do the same as between the gold florin and the silver florin, she would refuse to do so. And so it would be all around. It was politically impossible and commercially impossible to establish a fixed and permanent relation between the two metals. All governments together, with their united efforts, could not do it. Mr. Horton could not admit that it was a good answer to say that it was impossible to come to an agreement merely because this or that nation would not agree to it. The conference was inquiring whether the agreement ought to be made, whether it was for the interest of the nations that it should be made. Until 1873, the variations of supply and demand had not prevented silver from remaining comparatively steady for a long period. This was due to the bi-metallic system of France, which kept the two metals in equilibrium. By giving a wider basis to this system a still more complete stability would be obtained. Mr. Goschen said that, if Mr. Horton asked the conference to pronounce upon the utility of bi-metallism, irrespective of the possibility or impossibility of establishing it, he did not consider it necessary to give a categorical answer to a question thus hypothetically put. But if the practical question were put, he should not hesitate to affirm, as Mr. Feer Herzog had done, the entire and absolute impossibility of establishing a fixed ratio between the metals, and this for many reasons of a scientific and economic nature which he need not enter into in detail.

III.29.14

—At the fifth session the theoretical discussion of bi-metallism was continued by Mr Groesbeck, Mr. Pirmez and Mr. Horton.

III.29.15

—At the sixth session the president (M. Say) laid on the table a memorandum agreed upon by the European delegates as their collective answer to the American propositions. After thanking the government of the United States for calling the conference, the memorandum declares that the European delegates recognize, 1. that it is necessary to maintain in the world the monetary function of silver as well as of gold, but that the selection of one, of the other, or both simultaneously, should be governed by the special situation of each state or group of states; 2, that the question of the restriction of the coinage of silver should equally be left to the discretion of each state or group of states; 3, that the differences of opinion which have appeared exclude the discussion of the adoption of a common ratio between the two metals. The representatives of Italy dissented from the conclusions of the other European delegates.

III.29.16

—At the seventh session (Aug. 29), the representatives of the United States filed a paper expressing their thanks to the European states for accepting their invitation, but dissenting from that portion of the memorandum which refers the question of bi-metallism to the separate action of each state or group of states. After a vote of thanks to the president and secretaries, and the exchange of civilities, the conference adjourned.

III.29.17

Conference of 1881. This conference was called in the month of January, 1881, by the governments of France and the United States, "to examine and adopt, for the purpose of submitting the same to the governments represented, a plan and a system for the establishment, by means of an international agreement, of the use of gold and silver as bi-metallic money according to a settled relative value between those metals." It met at Paris, April 19. Delegates were present from Austria-Hungary, Belgium, British India, Canada, Denmark, France, Germany, Great Britain, Greece, Italy, The Netherlands, Portugal, Russia, Spain, Sweden and Norway, Switzerland and the United States. Mr. Brock (Norway), was the only delegate who had been a member of both the preceding conferences. Mr. Vrolik (The Netherlands) had been a member of the conference of 1867. Count von Kuefstein (Austria), Mr. Pirmez (Belgium), Count Rusconi (Italy), Mr. de Thoerner (Russia), and Mr. Horton (the United States), had been members of the conference of 1878. The other representatives of the United States were Wm, M. Evarts, of New York, ex-secretary of state, Allen G. Thurman of Ohio, and Timothy O. Howe of Wisconsin, ex-senators. At the first session Mr. Magnin, minister of finance of the French republic, was chosen president, and a committee of one from each state appointed to draft a "questionnaire," or list of questions to be discussed.

III.29.18

—At the second session (May 5) the questionnaire was presented by Mr. Vrolik, chairman of the committee, in substance as follows: Has the fall of silver been hurtful to commerce and to general prosperity? Is it desirable that the relative value of gold and silver should possess a high degree of stability? Is the fall of silver due to increased production, or to acts of legislation? If a large group of states should agree to the free coinage of gold and silver, of full legal tender, at a uniform ratio, would substantial, if not absolute, stability of relative value be obtained? If so, what measures should be taken to secure such result? The delegates of Germany then read a declaration on behalf of their government, giving the reasons which led them, in the year 1871, to adopt the gold standard. This reform was now so far advanced that they could not change their monetary system, but they were disposed to second the efforts of other powers which might desire to unite for the purpose of rehabilitating silver, by agreeing to abstain during a period of some years from all sales of silver, and during another period to sell only a limited quantity, so that the market should at no time be glutted thereby. Germany might even make other concessions short of changing her own monetary system. She might retire her gold pieces and treasury notes of five marks, leaving their places to be filled by silver. This would make room for 78,000,000 marks. Mr. Fremantle, the delegate of Great Britain, read a declaration of his government to the effect that they had decided in the first instance not to take part in this conference, understanding that the terms of the call issued by France and the United States committed the participating governments to the double standard. Having been subsequently assured that no committal was intended, and that entire liberty of action was reserved, they considered that they would be lacking in consideration toward friendly powers if they should persist in refusing to send a delegate. His instructions limited him to furnishing information concerning the laws and monetary system of England. They did not permit him to vote upon the proposition submitted. The delegates of British India and of Canada made similar declarations to that of Mr. Fremantle, except that the delegate of Canada was authorized to vote, reserving liberty of action for his government. The delegate of Denmark said that, as his government had no intention of abandoning the single gold standard, he was instructed to abstain from all discussion of means for establishing the double standard. The delegate of Portugal made a similar statement in behalf of his government. Any opinions which he might express in the debates should be understood as merely his private and personal views. The delegate of Russia said that his government reserved entire liberty of action and of opinion. If he should take part in the debates, it would be upon the same understanding as that announced by the delegate of Portugal. The delegate of Greece made a similar declaration. The delegates of Austria Hungary said that their position was the same that it had been in the conference of 1878. They had an ardent sympathy for all measures to restore silver to its former position, but they reserved for their government full liberty of action. The delegates of Sweden and Norway said that their government authorized them to take part in all discussions, reserving their right to deal with their own monetary system. The delegates of Switzerland were not authorized to take part in the discussions of the conference until its action should have been first reported to the federal council. Mr. Cernuschi (France) thought that the prospect of an agreement in favor of bi-metallism was encouraging. It was only necessary to secure the co-operation of England and Germany to insure success. England had indeed refused to join in a bi metallic union, but there was reason to believe that she might join at a later period. Germany had shown, through the declaration read to the conference, that she could not now change her course without great loss and inconvenience. He (Mr. Cernuschi) would suggest (but only on his personal responsibility) that the loss incurred by Germany in changing from the silver to the gold standard, estimated at ninety-six million marks, be reimbursed to her by the other nations which had bought her silver. These nations, he contended, had made a gain by purchasing the silver of Germany, equal to the loss which Germany had incurred in selling it—the silver being worth one to fifteen and one-half, if bi-metallism were put in force, whereas Germany had sold it at one to seventeen or one to eighteen. Mr. Brock (Norway) thought that bi-metallism was not only impracticable, but undesirable. The substitution of gold for silver in Europe and America was not an accident, but the natural, logical and necessary result of the progress of civilization. There was sufficient gold in the world to supply the wants of all the civilized races, including those now under the régime of paper money. So far from looking upon bi-metallism as a thing to be striven for, he thought it was something to be avoided. So far from seeing danger in the single gold standard, he could only see advantages in it. Mr. Moret Y. Prendergast (Spain) moved that the conference take into consideration, first, the important declarations of Germany, England, British India and Canada, in order to get at their true scope and value, and then to adjourn to a fixed date, in order to open negotiations with those governments if it were found that the declarations afforded a reasonable basis for negotiations. It was agreed to pass over this motion for the present, and to take it up at a later stage.

III.29.19

—At the third session Mr. Cernuschi, in furtherance of the suggestion made by him respecting the reimbursement of ninety-six million marks to Germany, asked for information from the several governments in reference to the amount of silver coined by them since 1874, and the prices at which it had been bought. Mr. Pierson (The Netherlands) called attention to the limping-standard countries (Etalon boiteux), meaning by this the countries where the coinage of gold is free and the coinage of silver is not free, but where silver coins of unlimited legal tender circulate side by side with gold. The Latin Union, Germany and Holland, were in this condition, a condition which could not last. The metallic stock of the banks must be all of equal goodness. Bank notes must be covered by coin having a real and not an artificial value. The danger of counterfeiting was very great when the legal tender value of silver coins was much above their metal value. The clandestine coinage of silver was a permanent menace in countries where the limping standard prevails. The demonetization of silver had not only brought trouble upon the limping standard countries, but upon the gold-standard countries, upon England and Germany as well as upon Holland. The fall of the value of the rupee had wrought confusion in the trade of England with India, and caused great losses to British merchants and manufacturers. The only remedy for these evils was international bi-metallism. Mr. Pirmez (Belgium) denied that the gold-standard countries were suffering by reason of the demonetization of silver. They had announced on the floor of the conference that they felt very well and that they did not desire any change. As to English trade with India, the English merchant merely added to the selling prices of his goods a sum sufficient to make good the decline in the value of the rupee. The Indian government had lost a certain percentage of its fixed receipts, by reason of the decline of silver, but British trade had not suffered, and the British government remained insensible to the adjurations of the bi-metallists; Germany was equally insensible. The sole result of universal bi-metallism would be the spreading over Europe of a large portion of the silver of Asia, and the sending to Asia of a corresponding amount of the gold of Europe. The production of silver would be stimulated by the artificial value conferred upon it, and the production of gold would be correspondingly checked. Thus a fresh depreciation of silver would be produced, this time irremediable. Gold would not be sold at fifteen and one-half for silver, because it would cost more to produce it. Gold would continue to circulate, but it would circulate at a premium, as it now does in Austria, Russia, and all the countries under the paper money system. All the governments in the world would be utterly powerless to decree the respective value of silver and gold.

III.29.20

—At the fourth session, Mr. Luzzatti (Italy) replied to the argument of Mr. Pirmez. He contended that there was a strong party in England in favor of bimetallism. He instanced the pamphlet of Mr. Gibbs, former governor of the bank of England, published with the approval of the present governor of the bank; also the remarkable work of Mr. Ernest Seyd; also the resolutions of the Liverpool chamber of commerce. As regards British India, he said that English trade with that country was injured by oscillations in the exchange, just as it is injured by oscillations in the paper money countries of Europe. These oscillations were uncertainties, and all uncertainty was prejudicial to the best interests of trade. Public opinion in Germany was likewise divided on the question, and Prince Bismarck seemed to have conceived doubts as to the value of the gold monometallic reform. There was really a dearth of gold in the world. This would be proved unmistakably when Italy, Austria and Russia should make the attempt to resume specie payments. Mr. Fremantle said that it must not be inferred from the pamphlet of Mr. Gibbs, that that gentleman, or the present governor of the bank of England, expressed the opinion of the bank of England, still less the public opinion of Great Britain. Mr. de Thoerner (Russia) said that gold was preferable to silver just as railways were preferable to roads and bridle paths, but it did not follow that roads and bridle paths should be discarded. For the purposes of a standard gold was certainly the best; for an instrument of exchange having an intrinsic value there was still room for the use of silver. Might it not be possible to treat silver in the light of a stock exchange security selling for what it was worth? If coined or stamped by governments in the form of ingots at its exact value in gold, it might be made to play an important part in the work of international exchange without danger to any interest. Count Rusconi (Italy) contended that money was not merchandise, but a creation of law; consequently the ratio of fifteen and one-half was just as good as the ratio of sixteen or twenty. Mr. Burkhardt Bischoff (Switzerland) contended that money was merchandise, and not the creation of law. All that the state could do was to give a certificate of its weight and fineness. This it effected by means of a stamp. When that stamp was affixed, the state had exhausted its powers. The double or alternative standard was unjust in that it allowed the debtor always to pay in the cheaper metal. The greatness of London as a centre of the world's exchanges was due in large part to the invariableness of the English standard. You could always know what a pound sterling was; you could never know with certainty what a franc was under the double standard régime, when that standard existed. Replying to Mr. Cernuschi's observation on the loss of ninety-six million marks incurred by Germany, he contended that this was a fallacious assumption. Instead of incurring a loss, Germany had really made a gain. She had sold her silver at rates considerably higher than the present market price. If she wished to repurchase it she could do so now at a profit. The proper way to deal with the great stocks of silver in the banks of the Latin Union was to melt them down into ingots, and issue silver certificates for them, of so many kilogrammes each, which might pass into the world's commerce at their value according to the weight represented by them. Mr. Cernuschi reiterated that Germany had lost ninety-six million marks by her monetary reform. This was testified to by the memorandum of the German government submitted to the conference. (This memorandum showed a loss of 96,481,136 marks, comparing the sales with the original cost of the silver.)

III.29.21

—During the fifth, sixth, seventh and eighth sessions the theoretical discussion was continued by Mr. Horton, Mr. Howe and Mr. Evarts on the part of the United States, by Count von Kuefstein and Chevalier von Niebauer (Austria-Hungary), Mr. Cernuschi and M. de Normandie (France), Mr. Pierson and Mr. Vrolik (The Netherlands), and Mr. SeismitDoda (Italy), in favor of bi-metallism; and by Mr. Brock (Norway), Mr. Pirmez (Belgium), Mr. Forssell (Sweden), and Count San Miguel (Portugal), against it. Sir Louis Mallet, on behalf of the government of British India, made some important statements. He said that he was authorized to engage that India would continue to keep her mint open to the free coinage of silver for a certain definite period, provided and upon the condition that a certain number of the principal states of the world engage on their part to maintain within their territories during the same period, the free coinage of silver, with full legal tender faculty, in the proportion of fifteen and one-half of silver to one of gold. He would explain how the depreciation of silver affected the Indian government. The government of India had to pay £15,000,000 in gold in London annually. This was the interest on the Indian debt contracted in gold, the interest on railway and canal obligations, also pensions and annuities, and that portion of the military expenditure which relates to pay and commissariat. These expenses were fixed by contract, and could not be reduced. The loss resulting on these remittances by reason of the fall of silver was £2,000,000 per annum. The government could not increase its revenue materially, the land revenue in Bengal being fixed in perpetuity, and in other provinces for long periods. It would be impossible, without serious political danger, to propose new taxes for reasons which the mass of the people would not be able to understand. But this actual loss was not the worst part of it; it was the absolute uncertainty which hung over the future, and which prevented any accurate calculation of the resources of the government. Then, there was a loss in trade resulting from the uncertainty of the exchanges and a loss of 20 per cent. on the great quantity of silver hoarded by the natives. The great wish of the financial authorities of India had been to have a common monetary system with England. Silver being impossible as a common standard on account of the English system, the choice must be between bi-metallism and gold, and although the latter was at present too difficult, it was certain that if any opportunity should offer itself India would seize it and enter into the struggle for the sole metal left as a solid basis for an international currency. Mr. Moret Y. Prendergast suggested that England might second the undertaking of Germany in behalf of silver by keeping one-fourth of the bank reserves in that metal as authorized by Sir Robert Peel's act. Mr. Fremantle replied that his government would take into very serious consideration the views put forward by the conference, but he suggested that the proposals be put in as definite form as possible. Mr. Forssell (Sweden) said that it was vain to talk about the sufferings and groans of this country and of that country, of this great bank and of that great bank, for the want of bi-metallism, so long as England and Germany refused to be converted. Notwithstanding all that had been said about the growth of bi-metallic opinion in Germany, here was the imperial government absolutely inflexible in its adherence to the single gold standard. There was not one ray of hope in that quarter. England was equally unmoved. Her Indian interests were so far inferior to her general interests that there was not the smallest prospect of her entering into a bi-metallic union. It was said that £2,000,000 per year are lost in the Indian exchanges. That was an ascertained sum, but the loss to be sustained by entering into a bi-metallic union was an indefinite and unascertained sum. Was an exact amount of loss ever bartered for an indefinite amount of risk? Was the monetary supremacy of a country ever sold for two millions sterling? Bi-metallism would always fail of adoption in face of the disproportion between the comparatively slight ailings complained of and the perfectly enormous remedy proposed, and however skillfully those ailings might be added up, the amount would never be deemed sufficient to justify the remedy. Mr. Forssell suggested three additional topics of discussion to be added to the questionnaire, viz.: Has there been, in the last ten years, a fall of general prices which may be attributed to the demonetization of silver and to a dearth of gold? Is there reason to believe that the successive adoption of the single gold standard will lead to a contraction of the metallic and paper circulation sufficiently great to exhibit itself in a fall of general prices? Is there ground for taking legislative measures to economize the use of gold in view of the progressive adoption of the single gold standard? Mr. Moret Y. Prendergast renewed his motion that the conference adjourn from the 19th of May to the 30th of June, in order that delegates who desired to communicate with their governments and receive further instructions upon propositions formulated in the conference, might have the opportunity to do so. Lord Reay (British India) thought that the excellent speeches which had been heard would be valuable contributions to economic science, but when the conference should reassemble it would be necessary to take practical steps to come to an agreement. The habits of English statesmen tended to make them give attention to facts rather than theories. If it were sought to persuade the United Kingdom to adopt bi-metallism, gentlemen could not do better than practice what they preached. They should begin by adopting bi-metallism at home. It would be another glory for the bi-metallists to accept the slight burden of some inconveniences which, on their own showing, would be only temporary. France and the United States were strong enough financially to make the experiment of bi-metallism. Great Britain had not waited for other nations to join her in adopting free trade. If other nations should show their faith in what they professed by adopting bi-metallism, Great Britain would be the first to render them the homage which she had always paid to any work tending to draw closer the bonds which unite nations. Mr. Seismit-Doda (Italy) seconded the motion for adjournment to June 30. The motion was unanimously adopted. On motion of the delegates of India the conference requested the several governments to take the opinion of the chief banks of issue in each on "the monetary question." Mr. Pierson (The Netherlands) asked the delegates of the United States what measures that country would take, in the event of the adoption of bi-metallism, to require the banks to receive silver on the same footing as gold. In most European countries the obligation could be imposed on banks of issue of buying gold and silver at a fixed price. What analogous steps could be taken in America? In short, what could she do in order that bi-metallism should exist there, not only in name, but in reality? He did not ask an immediate reply, but requested that a definite answer be made when the conference should reassemble.

III.29.22

—After an adjournment of six weeks, the conference held its ninth session, June 30.

III.29.23

—At the tenth session Mr. Horton regretted that he was, as yet, unable to present a response to the question which Mr. Pierson had put to the American delegates at the eighth session, or rather, to enter into the practical discussion to which the question would necessarily give rise. Mr. Thurman, reverting to the declarations of Germany and British India, which he read at length, said that these propositions required France and the United States to keep their mints open to the free coinage of silver of unlimited legal tender, this being the condition upon which Germany would agree to suspend her sales of silver for a definite period of time. While the United States would not reject any and every proposition which comes short of perfect bi-metallism, he was bound to say that a proposition which would expose them to alternate drains of gold and silver, according as the one or the other should command a premium in the market, would not be acceptable. The United States held a large stock of gold at the present time, and only a small stock of silver. They would hesitate to enter into an agreement the effect of which might be to lessen the amount of their gold. They would cheerfully become parties to a great bi-metallic union, but without such union would not surrender their power over their own coinage. He said this without underrating the importance of the German and English propositions, which were entitled to most respectful consideration, but which, in his judgment, fell far short of what the exigency required. Mr. Schraut (Germany) desired to combat the assertion that the sales of silver by his government had been the principal cause of the depression of that metal. The largest sales had been made in the year 1877, when the average price was one and three fourths pence higher than in 1876, and two pence higher than in 1878, showing that there were other and more powerful causes at work than the sales of silver by Germany. These causes, in his opinion, were the increase of production, and the increase of sales of India council drafts on the London market, which, taking the place of silver as remittances to India, lessened the demand for silver by an equal amount. The sale of such bills in London from 1871 to 1879 had exceeded the sales of silver by Germany more than three to one. Mr. Cernuschi contended that neither the more plentiful issue of bills by the Indian government nor the increased productiveness of silver mines had caused the depreciation of silver. If Germany had not adopted monometallism, France would have continued to coin the two metals freely: therefore the depreciation could not have taken place. Germany was the sole author of the silver crisis. Unless she had further declarations to make to the conference, she had as yet made no proposition which the United States and France could regard as a concession. Mr. Horton, while agreeing with Mr. Cernuschi as to the mistake which Germany had made in her monetary legislation, could not look upon her as the sole cause of the mischief. It dated further back. England began it, and the Paris conference of 1867, in which the United States took part, propagated it. The responsibility was not only on Germany, but on the civilized world. Baron von Thielmann (Germany) said that his government had nothing to add to the declaration presented at the first session of the conference. Mr. Fremantle said that at a later session of the conference he should present a fresh communication which he had just received from his government.

III.29.24

—At the eleventh session Mr. Dumas (France) made an extended argument in favor of bi-metallism. But if bi-metallism were for any reasons found to be impracticable, he would suggest the suppression of small gold coins, in order to give greater employment and steadiness of value to silver. Mr. Schraut concurred in this suggestion, and would add to it the suppression of bank notes of less denomination than twenty francs, and of the one and two dollar notes in the United States. Mr. Brock (Norway) said that all monometallists would concur in those suggestions, but he pointed out that the proposal of Mr. Dumas differed from that formulated by his colleague, Mr. Cernuschi. Mr. Cernuschi said that all such measures were only half measures; they only looked at small sides of the question, and could come to nothing. The internationality of silver at fifteen and onehalf was the point to be arrived at. Without that, nothing would be effected. "We must have all or nothing." Mr. Pierson presented a declaration of The Netherlands government saying that it would join in a bi-metallic union consisting of "all the great states of Europe and America," but could not engage to act thus if the system were confined to a more restricted area. It would, nevertheless, give serious attention to a project, if proposed at the conference, for establishing bi-metallism in an area comprising only several great states of Europe and America.

III.29.25

—At the twelfth session, Mr. Seismit-Doda presented a declaration of the government of Italy, saying that Italy would unite with the other states of the Latin Union and the United States of America "in resuming the limited coinage of silver" for a fixed term, provided Germany would agree during the same term (which should be at least five years) to suspend her sales of silver and replace her gold five-mark pieces and treasury notes with silver money, and provided the British government would increase the paying power of its silver crowns. Italy could in no case agree to the free and unlimited coinage of silver, unless England and Germany, or one of them, should unreservedly adhere to it. Mr. Fremantle presented a declaration from his government transmitting to the conference a communication from the bank of England. This communication was in effect an agreement on the part of the bank to receive silver and issue its (gold) notes therefor, to the extent of one-fourth of the gold held by the bank in its issue department, as authorized by its charter, provided that the mints of other countries would return to such rules as would insure the certainty of the conversion of gold into silver and of silver into gold. All its notes were payable in gold on demand, and it was required by law to receive all the gold offered to it in exchange for its notes. The president suggested that it would be well at the next session to consider the subject of adjournment. After such profound discussions it was not likely that any fresh light would be thrown upon the subject or additional eclat be given to the proceedings.

III.29.26

—At the thirteenth session (July 8) Mr. Evarts, in behalf of the delegates of France and the United States, and in the name of their respective governments, read a declaration stating, 1, that the depression and great fluctuations of the value of silver relatively to gold are injurious to commerce and to the general prosperity, and that the establishment of a fixed relation of value between them would produce most important benefits to the commerce of the world; 2, that a bi-metallic convention entered into between an important group of states for the free coinage of both silver and gold at a fixed ratio and with full legal tender faculty, would cause and maintain a stability in the relative value of the two metals suitable to the interests and requirements of commerce, 3, that any ratio now or lately in use by any commercial nation, if so adopted, could be maintained, but that the adoption of the ratio of fifteen and one-half to one would accomplish the object with less disturbance to existing monetary systems than any other ratio; 4, that a convention which should include England, France, Germany and the United States, with the concurrence of other states which this combination would assure, would be adequate to produce and maintain throughout the commercial world the relation between the two metals that such convention should adopt. The president said that a considerable number of delegates had expressed a desire to see the conference suspend its labors and adjourn to some later date. He suggested that this subject should be discussed. Mr. Forssell (Sweden) objected to this proposal as likely to lead to no practical result, while it would give a character of permanence to the conference which was not contemplated or authorized by the governments represented. It would be better to acknowledge at once that the projects of bi-metallism had collapsed, and to reaffirm the conclusions of the European delegates at the conference of 1878. Baron von Thielmann (Germany) asked that the reasons for adjourning the conference to a future date be formulated. After a recess of twenty minutes, the president read an explanatory resolution saying that, considering the speeches and observations of the delegates and the declarations of the several governments, there is ground for believing that an understanding may be established between the states which have taken part in the conference, but that it is expedient to suspend its meetings; that the monetary situation may, as to some states, call for governmental action, and that there is reason for giving an opportunity for diplomatic negotiations; therefore the conference adjourns to Wednesday, April 12, 1882. The resolution of adjournment was supported by Mr. De Normandie, Mr. Pirmez, Lord Reay, Count von Kuefstein and Mr. Brock. Mr. Forssell withdrew his objection. The resolution was adopted. On motion of Baron von Thielmann, the thanks of the conference were awarded to the president for the impartiality with which he had directed the proceedings. The conference then separated. It did not reassemble at the time fixed in the resolution of adjournment. There has been no public statement of the reasons why it was not reconvened.

HORACE WHITE.

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