s 4 * fi v '- hit THE LIBRARY OF THE UNIVERSITY OF CALIFORNIA RIVERSIDE RIVERSIDE PUBLIC LIBRARY RIVERSIDE, CALIFORNIA JAN 13 '120 ^INTERNATIONAL MONETARY CONFERENCES THEIR PURPOSES, CHARACTER, AND RESULTS WITH A STUDY OF THE CONDITIONS OF CURRENCY AND FINANCE IN EUROPE AND AMERICA DURING INTERVENING PERIODS, AND IN THEIR RELATIONS TO INTERNATIONAL ACTION BT -V HENRY B. RUSSELL NEW YORK AND LONDON HARPER & BROTHERS PUBLISHERS 1898 u Copyright, 1898, by HARPKII k BROTHERS. All ri.jliti rutrtld. PREFACE EXCEPTING to the few who make a special study of mone- tary science and affairs, the extensive literature pertaining thereto, and mainly produced within half a century, is a con- fusing jungle of conflicting opinions, isolated facts, dogmatic arguments, and diverse conclusions. While economists dis- cuss, governments act ; -and thus those who, by the exercise of their political power, largely determine the conditions of a nation's money, lacking the time, the facilities, or, perhaps, the ability to explore the jungle for themselves, are apt to be influenced by any special argument that falls under their eye, or by some plausible plea of those politically artful or finan- cially selfish, rather than by an understanding of their own, based upon a knowledge of the practical conditions as devel- oped by antecedent events. Even the conclusions of able and honest disputants have been frequently vitiated by the use made of events out of their chronological order, or in disre- gard of their historical environment, simply for the sake of re- inforcing an opinion or exalting a theory. This book has been written in the belief that much of the confusion and difference of opinion that has made the Silver Question such a vexed one has been due to misapprehensions arising from the study of particular events or facts without sufficient regard to the influences which produced them. By the application of the principle of evolution, natural science assumed a new character. It is equally unsafe in any social j v PREFACE or political study to judge of a fact or of an event by itself, severed from the soil which nurtured it, or removed from its original atmosphere. In no study is such a method so sure to lead to inaccurate conclusions as in that of money, which, in its very nature, is obscurely yet firmly rooted, not simply in the social life of nations, but in the commercial conditions of a whole world. An understanding of the Silver Question cannot be had from conditions that obtain in the United States alone. The effects, for example, of the law by which this government of- fered sixteen pounds of silver for one pound of gold must be studied in connection with another fact, that France was at the same time offering a pound of gold for only fifteen and one- half pounds of silver. A nation has its own coins, but com- merce makes money international. Yet the tendency has been for each nation to discuss the question of coinage from its own standpoint, and without regard to the natural relations of its own peculiar circumstances in the historic and international order of affairs. These relations are extensively disclosed in the official rec- ords of international monetary conferences, the character of which has affected monetary conditions to a greater degree than has been generally considered. But the official reports of these conferences are ill adapted to the needs of the general reader, and, moreover, arc not complete statements; equally unsatisfactory are other documents pertaining to the confer- ences or to the intervening conditions which are scattered through government reports in this country and in Europe. It has occurred to the writer that the principal facts in relation to these events, properly arranged and concisely stated, might throw a stronger light on the questions in dispute, reveal the logic of events, too often hidden in the maze of theories and political debates, and enable a people, whose opinions give character to legislation, and on whose judgment largely de- PREFACE V pend the financial strength of their government and the event- ual determination of a monetary system, adequate and just for the whole world, to better understand a problem which seems destined to trouble their federal politics. In. drawing information from a multitude of sources, the author could not fail to appreciate the possibilities of uninten- tionally embracing some errors of fact; but he believes the general principles underlying the evolution of monetary condi- tions are unmistakable. It is not intended to advance any theory or to propose any scheme. The purpose is simply to tell the story of the conferences, and of the intervening monetary events of importance, as affecting conferences or as affected by them, in part, the story of the evolution of the Silver Ques- tion in this country and in Europe. HENEY B. KUSSELL. HARTFORD, December, 1897. "There is a vicious circle: states fear to em- ploy silver because of its depreciation, and the depreciation continues because states refuse to em- ploy it. Right Honorable George J. Goschen, British Dele- gate at the Conference of 1878. CONTENTS CHAPTER I SLOW DEVELOPMENT OP INTERNATIONAL COINAGE REGULATIONS THE LATIN UNION PAGE Crudities of ancient coinage and commerce 1 The Renaissance 6 Early regulations and treaties 7 Financial development in America 9 Progress of the Decimal System ....... 17 Napoleon III. and his economic campaign 23 Formation of the Latin Union 26 Beginning of the fall of silver 32 CHAPTER II GENERAL ACCEPTANCE OF THE PRINCIPLE OF THE GOLD STANDARD CONFERENCE OF 1867 Napoleon's programme for international coinage .... 34 His overtures to the United States ....... 38 An international committee and its conclusions 46 Opening proceedings of the conference ...... 47 The question of the standard 63 Appearance of Jerome Napoleon 72 England's declaration 73 Results of the conference 81 CHAPTER III CHANGES IN COINAGE LAWS AND MINT REGULATIONS THE DEMONETIZA- TION OF SILVER Agitation for international uniformity in coinage .... 87 Situation in the United States 91 The English Parliamentary Commission 101 Effects of the Franco-Prussian war 103 Revision of mint laws in the United States 109 viii CONTENTS PAGE German unity and coinage reform 115 Dropping the silver dollar in Congress 118 Monetary changes in Sweden and Holland 123 Germany's imperial coinage . 126 CHAPTER IV CONTINUED LIMITATION OF SILVER COINAGE AWAKENING IN THE UNITED STATES Changes in the conditions of gold and silver 129 Effect of changes on European governments 137 Holland seeks aif international conference 141 Anxiety in England 147 Discovery of silver demonetization in United States . . . 151 The Silver Commission of 1876 161 The Silver Question in politics 168 Refunding and resumption 170 The Bland Bill in Congress 178 The Allison amendment and a conference 186 Conditions in the European markets 192 The silver act a blow to bimetallism 197 CHAPTER V FIRST EFFORTS TO SECURE INTERNATIONAL BIMETALLISM THE CONFER- ENCE OF 1878 Invitations to a conference ......... 202 Its meeting at Paris 204 The American propositions ......... 209 Position of European governments 212 Germany's responsibility for the situation 231 The action of the Latin Union 233 Appeals of the American delegates 235 The European response ......... 244 Declaration of the delegates of the United States .... 247 CHAPTER VI SERIOUS LOSS OF GOLD BY EUROPEAN BANKS OF ISSUE THE CONFER- ENCE OK 1881 Low reserve in the Bank of England ... ... 251 Austrian mints closed to silver 253 Germany suspends sales of silver ....... 256 France and the United States arrange for a conference . . . 269 The German declaration and its alleged concessions .... 274 The long debate 278 CONTENTS ix PAGE Position of the United States as to bimetallism 292 The adroit hand of England . 302 Intermission of six weeks 306 Plan of Moritz Levy of Denmark ........ 308 Offer of the Bank of England to hold silver in its reserve . . . 317 Prorogation of the conference 321 CHAPTER VII SILVER COINAGE IN THE UNITED STATES AND PROTECTIVE MEASURES IN EUROPE TIIE STRUGGLE FOR GOLD Holland provides for sale of silver 326 Working of the Bland-Allison Act 327 Conditions in England and India 330 " Central European Zollverein " 333 Mission of Mantou Marble to Europe 338 An appeal from India for an agreement 341 Mission of Edward Atkinson to Europe 846 Report of the English Gold and Silver Commission .... 350 Beginning of the gold export movement from the United States . 354 Secretary Windom's plan for silver purchases 364 The Baring crisis 367 Negotiations for another conference 370 CHAPTER VIII PROPOSED PLANS FOR A LARGER USE OF SILVER THE CONFERENCE OF 1892 The conference assembles at Brussels * . 376 Propositions of the United States 378 Statements of various governments 382 The Rothschild plan and its meaning 384 A secret committee for examining plans 388 The Levy plan 394 General discussion of bimetallism 400 Prorogation of the conference 405 CHAPTER IX THE COURSE OF MONETARY EVENTS SINCE 1892 THE PRESENT AND THE FUTURE Political conditions in the United States ...... 409 The Indian Currency Commission and its report . . . .412 Closing of the Indian mints 417 Reasons for gold exports from the United States .... 423 x CONTENTS PAGE Repeal of the silver-purchase act 426 Passage of the Mirbach resolution in the Reichstag .... 431 House of Commons votes unanimously for a conference . . . 434 The position of France 435 " Silver craze of 1895 " in the United States 438 The election of 1896 442 Monetary changes in Russia and Japan 445 The conditions in Mexico 449 The plight of India 451 The Wolcott Commission 459 Increased gold production and the decline of silver .... 463 Possibilities of the future 464 INDEX 469 INTERNATIONAL MONETARY CONFERENCES CHAPTER I SLOW DEVELOPMENT OP INTERNATIONAL COINAGE REGULATIONS. - THE LATIN UNION FROM the early period in the world's history when the precious metals came into use as money until near the middle of the present century the adoption of international regula- tions for their coinage, circulation, or relative value did not naturally suggest itself. With only cumbrous and slow means of communication, crude methods of coinage, or none at all, a commerce greatly restricted and principally by barter, ancient states possessed little understanding of the relation of their own economic affairs to those of their neighbors. The principles underlying commercial exchanges had little op- portunity to manifest themselves when tribal or national pros- perity was commonly reckoned by the success with which am- bitious or jealous rulers acquired by conquest the rich lands and numerous herds of more thrifty but less warlike peoples, either to remain as conquerors, or, returning to their original domains with the more desirable plunder, to exact revenue in the most convenient and portable form, till they were in turn overcome by some similar process. Lands and herds were the main evidences of wealth, cattle the commonest standard of value. So far as there was any coinage, it was held as the pre- rogative of the ruler, and was mainly confined, till recent times, to the baser metals. There was little or no thought of 2 THE LATIN UNION the exchangeable value of coins outside the king's domain; for even the more civilized ancients, though refined artists and profound reasoners did not acquire the power of careful eco- nomic observation, and, currency being rare, few of the general laws governing it were discovered till after the gold and silver stores of American aborigines were poured into Europe. Very little gold was coined in Athens or Greece proper before the time of Alexander the Great. The amount of money now in existence is incomparably greater than either in classic or mediaeval times. Mines were then few, and most of the existing treasure was locked up in the vaults of kings or hoarded by private persons. During the time of the consuls the leading Roman families manufactured their own coins as they saw fit; but when the greater part of the then known world was brought under the imperial sway of Augustus, his vigorous arm suppressed these private operations and estab- lished a coinage bearing the image and superscription of Caesar through the wide extent of an empire of 120,000,000 souls. A great increase in the use of coins followed, and there was a marked tendency towards uniformity, tributary states seeking to coin their metal in accordance with the Roman standard. But the mines were not worked, and the mass of the precious metals dwindled away to such an extent that the scarcity of money became a serious cause of weakness to the imperial structure. When the empire broke up, some of the conquerors still maintained the Roman monetary system; but, little, by little, petty chieftains, seizing the political debris, built up small states, lay and ecclesiastical, each of them claiming the sovereign power of coining money. Soon licenses to coin were granted to nobles and bishops. This was pre-eminently the case in Germany. In 910 we find Otho II., of the then dominant Saxon line, granting such licenses to the archbishop of Strasburg and to lesser bishops. Similar privileges were granted under the heptarchy in England, and the practice COINAGE OF NOBLES AND BISHOPS 3 quickly became general. Naturally, such political and eccles- iastical conditions soon brought about the greatest dissimilarity in coins, which were chiefly of silver and copper, and could be struck only to a limited extent; indeed, from the fall of the Roman empire till nearly the eleventh century, gold and silver were rarer than they have ever been in historic times. Those who could secure the precious metals were tempted by their ever-increasing value and the disturbed condition of the times either to preserve them in safer and more ornamental shape or to adopt the villianous practice of debasing the coinage. It has been estimated that in the days of Charles the Great the stock of gold and silver in Europe, outside of Constantinople, was not greater than thirty-six millions sterling.' There was little uniformity in the estimates of the relative value of the two metals. In Florence the coining ratio was 10| and 11 to 1; in Germany, all the way from 8 to 12 to 1; in Flanders, 13.22 to 1 ; in England, 13.5 to 1. The ratio dif- fered even within a single state at the same time. Anything like exact uniformity in coins of the same nominal value was necessarily rare in countries where the rulers, nobles, and bishops, all coining for themselves, did not scruple to reduce the amount of precious metal in their pieces for their own profit, and when the best process of coinage known consisted in placing the metal between steel dies and striking with a hammer. It was not until late in the sixteenth century that Antoine Brucher invented a mill, and it was considerably later when the old methods were superseded. An advance upon these crude methods naturally resulted from a combination of influences beginning with the Crusades, one of the important economic effects of which was the stimula- tion given to commerce with the East. Although this growing trade was carried on largely by monopolies, it led to a greater diffusion of wealth and a wider distribution of the precious metals. xVnother notable stimulus was given to commercial 4 THE LATIN UNION transactions when the persecuted Jews introduced drafts or orders. " They invented," says Montesquieu, " bills of ex- change, -and by these means commerce was enabled to elude violence and maintain itself, the merchants having only in- visible wealth which could be sent anywhere, and left no trace of its passage." These expedients were less the invention of mediaeval Jews than their inheritance. Similar methods probably prevailed to some extent even in Babylonian days and in the times of Jewish national prosperity. The scattered people carried their traditional familiarity with money changing into mediaeval Europe, and by their genius for finance, and because of the simplicity of the masses in commercial matters and of the improvidence of kings and nobles, they came to acquire nearly all the ready money by the eleventh century. Odious to the rulers, they were no less necessary. When placed under the sentence of perpetual ex- communication, they could be robbed, tormented, and driven out with impunity, but they were equal to the emergency. In exile, they deposited their precious metals in safe hands, and continued their trade by giving travelers secret letters or bills of exchange to those intrusted with their wealth. Thus commerce spread rapidly. The Germans came to have a counting-house on the Rialto, and commercial leagues or trades unions were formed in the growing German cities, where commerce received another great impetus. The Ilan- seatic League became one of the most powerful commercial or- ganizations ever known to history, including, besides the cities which composed it, forty-four confederate and twenty allied cities in France, England, Elanders, Spain, and Italy, without counting the subject towns. It had four great branches at Bergen in Norway, Novgorod in Russia, Bruges in Belgium, and at London. Established in 1219, primarily by German cities for the protection of their trade, which was exposed to both the rapacity of rulers and the attacks of pirates, it devcl- MEDIAEVAL TRADE AND COINS oped into an association for the consideration and promotion of all means for the protection and advancement of its trade. With the discovery of America and new waterways in the fifteenth century the league began to decline, and at the last diet, held at Lubeck in 1630, the majority of the cities re- nounced their alliance. But while so extensive a commerce, so long under the control of organizations of such great power, unquestionably developed the methods of exchange, only scant consideration was given to questions of coinage. Commerce was still largely barter, and the precious metals played a subordinate part in determining values. 1 When ex- changed, it was usually by weight, while taxes, rents, and feudal dues were paid in produce. The breaking-up of the trade leagues was, in no small degree, due to the. increased use of the precious metals, the greater safety of commerce i How inconsiderable was the coinage in England before the present century may be shown by the following statement of the amount for each principal reign from the time of Henry III.: 1216-1272 Henry III. 1272-1307 Edward I. 1307-1327 Edward II. 1327-1377 Edward III. 1377-1399 Richard II. 1399-1413 Henry IV. 1413-1422 Henry V. 1422-1461 Henry VI. 1461-1483 Edward IV. 1485-1509 Henry VII. 1509-1547 Henry VIII. 1558-1603 Elizabeth 1603-1625 James I. 1625-1649 Charles I. 1649-1660 Cromwell 1660-1685 Charles II. 1685-1689 James II. 1689-1702 William and Mary 1702-1714 Anne 1714-1727 George I. 1727-1760 George II. 1760-1820 George III. 1820-1830 George IV. 1830-1837 William IV. 1837-(1892) Victoria Silver. Gold. Total. 3,898 3,898 38,603 38,603 46,756 46,756 85,701 11,340 97,041 2,228 3,988 6,216 314 396 710 6,924 19,746 26,670 404,677 38,317 442,994 89,704 230,760 320,464 138,280 189,232 327,512 355,403 292,916 648,319 6,359,583 795,138 7,154,721 1,641,005 3,666,390 5,307,395 8,776,544 3,319,677 12,096,221 1,000,000 154,512 1,154,512 3,722,180 4,177,254 7,899,434 518,316 2,113,639 2,631,955 7,093,074 3,418,889 10,511,963 207,095 2,484,531 2,291,626 233,045 8,492,876 8,725,921 304,360 11,662,216 11,966,576 6,827,818 75,447,489 82,275,307 2,216,163 36,147,701 38,363,864 1,111,298 11,435,334 12,546,632 46,265,269 393,903,734 440,169,003 6 THE LATIN UNION following the discovery of America, and the larger use of bills of exchange. The first English gold coin was not struck till the reign of Henry III., in the latter part of the thirteenth century. No regular gold currency was introduced till a century later, under Edward III., and the pound sterling was not minted till 1489, by Henry VII. The first German gold coins are said to have been struck by Archbishop Walram, of Cologne, about 1340. Russian coinage began late in the fifteenth century. Even where coinage flourished it manifested the greatest variety, was generally unfit for a standard of value, and was seldom used as such. France during all these centuries was annoyed by the diverse coinages of feudal sovereigns and ecclesiastics of high and low degree, and many specimens of the coinage of sec- ondary dukedoms and minor principalities of the various na- tions of Europe are still extant. The situation greatly changed when Spain brought gold and silver from America. Up to that time the greatest wealth consisted in land; but beginning with the sixteenth cen- tury the Spaniards annually threw into circulation a large quantity of both gold and silver, while at the same time valu- able merchandise came in increasing quantities from Asia. Europe had more money and more merchandise, an exceed- ingly fortunate circumstance, for without the money the value of the merchandise would have fallen, wiping out a large amount of wealth and injuring commerce. Finding purchasers for the merchandise, trade increased, money began to be more widely distributed, movable fortunes were accumulated, the bourgeoisie developed strength and im- portance, princes began to study economic questions, nations established closer relations, and knowledge advanced. Europe was born again; it was the renaissance. The art of printing was discovered, the calendar was reformed. The thirst for knowledge and the admiration of art seized princes, popes, THE RENAISSANCE 7 knights, monks, and burgers. Even in Germany, troubled with religious dissensions, the poet and scholar Ulrich von Hutten exclaimed with reference to the intellectual awaken- ing, " How good it is to live ! " Civilization had waited long, but when the change came it brought with it such names in literature as Tasso, Ariosto, Montaigne, Rabelais, Cervantes, and Shakespeare; in art, Michael Angelo, Titian, and Raphael; in science, Copernicus and Tycho Brahe; in politics, Machia- velli; in theology, Martin Luther. We are not apt to exag- gerate the part that American gold and silver had in the con- struction of the notable examples of architecture of that cen- tury. It is not strange that the incongruous condition of the coin- age attracted attention in such times, and that many practical remedies were applied within the different states. Nor is it strange, in view of the early commercial development of the German cities and the remarkable variety of their coins, that the first really important efforts for international, or otherwise mutual, coinage agreements took place among the Germans. Members of one race, though preserving many independent political organizations, they had evident incentives to consult their mutual interests regarding their chaotic coinage. As early as 1354, the three ecclesiastical electors, Mayence, Treves, and Cologne, had entered into a coinage agreement for " coining a common money of gold and silver in all our lands," but the arrangement appears to have been futile. With the increase in metallic circulation in the fifteenth century, the four electors of the Rhine formed a coinage union, agreeing as to the denomination of the coins to be struck and as to means for the protection of the coinage prerogative. In spite of re- ligious wars and other obstacles, various agreements were made from time to time between the petty German powers regarding the reciprocal acceptance of coins. Such agreements were also made at Zinna in 1667, and at Leipzig in 1690, between the g THE LATIN UNION electors of Saxony and Brandenburg and the House of Bruns- \vick-Liineburg; at Vienna, in 1765, between Austria and the elector of Bavaria; and at Worms, in 1766, between the elect- ors of Mainz, Treves, and the Palatinate Landgrave of Hesse- Darmstadt and the" free city of Frankfort. Provisions for the mutual acceptance of coins are found in the early treaties es- tablishing the German customs-union, and gradually the coin- age regulations of all the members of the union were reduced to a practical system of exchangeability on a uniform basis, but all sorts of coins remained in use. Similar steps were being taken in other portions of Europe for the harmonizing of the coinages of different provinces, and for unifying the coinage prerogative. In the time of Louis IX. there were in France over eighty barons and bishops holding this prerogative by grant of the king. An agitation for depriv- ing them of the right was started under Louis X., but it re- sulted only in the publication of an official list of those entitled to the right, though stricter provisions as to the number to be stamped from the mint unit of weight and as to the imprint were enforced. Gradually, under the succeeding kings, the crown purchased the coinage right from those to whom it had previously given it, and by the end of the fifteenth century, or when gold began to come from America, the unity of the coinage prerogative was wellnigh reached in France. In Eng- land after the Magna Charta, the influence of Parliament was directed towards such unity. But up to the present century there was nothing like an agreement between distinctly different nations attempted. Each great state regarded its coinage as entirely its own busi- ness, to be regulated as it saw fit and irrespective of the legal ratios fixed elsewhere, except upon occasions when animated by a desire to get the better of some neighboring state. With the beginning of the nineteenth century the coinage systems of Europe began to assume more clearly defined forms. Eng- EFFORTS FOR MONETARY REFORM 9 land, after overrating gold in her coinage all through the eighteenth century, was forced by the Napoleonic wars to a currency of inconvertible paper, but in 1816 established her present gold standard. When the provinces of the Nether- lands and Belgium were united under a single sceptre, both countries had a variety of coins, for every province had claimed the right of coming money; but a law was passed under Will- iam L, establishing the florin as a unit. In 1838 the German customs-union formed a coinage union at Dresden; in 1845, at Karlsruhe, the Prussian customs-union took a similar step; and in 1857 both unions united in a treaty which remained prac- tically binding on all the German states till the formation of the empire in 1870, although Austria, which was a party to this so-called monetary union, withdrew in 1867 as a result of the war with Prussia over Ilolstein. This treaty extended the regulations fixed by previous agreements, and fixed for the purposes of the Zollverein the relative values of the gold crown, the silver thaler, and the silver florin. The issue of " vereinsthalers," to have currency throughout the contract- ing states, was also provided for. But none of these arrange- ments could really be called international. They were agree- ments between states then within the nation. The germ of real international action as to coinage was first developed in America, not by considerations for the coin- age strictly, but by the scientific movement about the middle of this century for uniform weights and measures and for the extension of the decimal system. It was a phase of another notable scientific awakening, when new economic laws were laid down by Gournay, the Frenchman, and Adam Smith, the Scotchman. The modern decimal system of weights and measures originated in France in 1790, and nine years later the prototype meter of platinum was constructed by an inter- national commission representing the governments of France, Holland, Denmark, Sweden, Switzerland, Spain, Savoy, and 10 THE LATIN UNION the Roman Cisalpine and Ligurian republics. While the prog- ress of the system was slow outside of France, its advantages suggested themselves to scientific men and leading statesmen, and to none more than to those Americans influential in the early constitutional history of the United States. In no coun- try, perhaps, were the conditions so favorable for the intro- duction of new ideas, for the government was new and the people less affected by long-standing traditions. Nowhere could plans of uniformity appeal so strongly to the people as in the new republic, where great lack of uniformity prevailed, to some extent in weights and measures, but more especially in coins. Originally and for a long period the American people used the English monetary terms most extensively, but the ideas an- nexed to the pound, shilling, and penny were almost as vari- ous as the states themselves. Several attempts were made by the Continental Congress to harmonize the different coins cur- rent, and in 1778 a committee was appointed to consider the state of the money and finances of the country, " and report thereon from time to time." In 1782 Robert Morris, superin- tendent of finance, believing it necessary for the country to have a standard of its own by which to estimate the various coins current, recommended the adoption of an American coin, and, in view of its scientific advantages, a decimal system of numeration. At the same time Jefferson added some notes favoring the application of the decimal system not only to money but to weights and measures. He advised that the silver dollar should be made the unit of value dollars were already called for in the requisitions of Congress while Mor ris proposed a unit of a quarter of a grain of pure silver. Jefferson's decimal plan, elaborated by the genius of Hamilton, was adopted by Congress in 1792, the law decimally subdivid- ing the dollar thus antedating a little the establishment of the metric system in France. But it was many years before the BEGINNING OP AMERICAN COINAGE 11 people of some sections of the country could be persuaded to replace their familiar reckoning in pounds, shillings, and pence by that of dollars and cents; and it was practically a generation and a half before a national coin came into any- thing like general use. For a half -century the currency con- sisted almost entirely of foreign coins and bank-notes, the former forcing out national silver coins, so that in 1806 the coinage of dollars was stopped, and the latter tending much of the time to force out all but inferior foreign coins. Our great- grandfathers were not so sentimental over the .silver dollar as some of us have become in the last quarter of a century. Thomas Jefferson dealt it the first blow when as President he caused the following notice to be sent to the Director of the Mint: " Department of State, "May 1, 1806. " Sir: In consequence of a representation from the Directors of the Bank of the United States that considerable purchases have been made of dollars coined at the mint for the purposes of exporting them, and as it is probable further purchases will be made, the President directs that all silver to be coined at the mint shall be of small denominations, so that the value of the largest pieces shall not exceed half a dollar. JAMES MADISON." Except a thousand pieces coined just thirty years after this order, no more silver dollars were coined till after Andrew Jackson retired from the Presidency. For nearly half a cen- tury Congress devoted its consideration of the currency mainly to plans for fixing the exchangeable value of foreign coins, and to proposals for changing the ratio between gold and silver to keep either the one or the other in circulation. Under such conditions, the government being unable to keep in circulation any coinage of its own, and the old stock- ings of the people being full of old coins bearing the stamp of many foreign mints, with all sorts of names and with dif- ferent values in different places, the advantages of securing an international uniformity in coinage could not fail to attract the attention of the brighter minds. France had, meanwhile, 12 THE LATIN UNION issued invitations to the various powers to co-operate in the construction and establishment of the metrical system of weights and measures, and, in obedience to a resolution of the United States Senate, passed in 1817, the Secretary of State, John Quincy Adams, made a report strongly and brilliantly advocating an international conference. While urging such a conference, especially with Great Britain, Trance, and Spain, which also had the subject under consideration, with the main view to securing uniformity in weights and measures, he added a note on the proportional value of the pound sterling and the dollar, clearly showing that he appreciated the desira- bility of a plan approximating the exchange values of coun- tries with which we were most extensively engaged in com- merce. The conventional proportion between the pound sterling and the dollar, used in commercial intercourse and sanctioned by Congress, had settled the par of exchange at one pound ster- ling for $4.44 in the United States, while in Great Britain it was at four shillings and sixpence for the dollar. " The results of the two estimates are not the same," wrote Adams; " if the dollar is worth four shillings and sixpence, the pound sterling is worth four dollars and forty-four cents and four mills, and an endless fraction of four decimal parts. If the pound sterling is worth $4.44, four shillings and sixpence, or fifty- four pence, are equal only to ninety-nine cents and nine mills. The difference is one mill in a dollar, or one thousand dollars in a million." Besides this, gold and silver coins, even if in practice scarce, were in principle legal tender for any amount, but in England silver was only legal tender in payments not exceed- ing forty shillings; and by restriction of cash payments by the bank, the only material in which an American merchant having a debt due him in England could obtain payment was INCONGRUITIES IN EXCHANGE 18 paper of the Bank of England, while the English merchant could obtain on this side either gold or silver. Besides the incongruities pointed out by Adams there were many indications of an unhealthy condition of the currency. All the mint could do was to stamp bullion into convenient form for exportation. The spectacle must have been hu- miliating to the sagacious financiers and earnest patriots of those days, but the " people " thought little or nothing about it. Even so stanch a believer in Democracy, a man so de- liberately plain as Jefferson, said, when speaking of the money question, " The bulk of mankind are schoolboys through life." As a people, the Americans were proud of their independence and held it dear. Running their own government and by energy and thrift making progress in their resourceful do- main, they were not inclined to ask odds of any foreigner re- garding forms of money. They had recently " whipped " Eng- land a second time on both land and sea. They felt, and un- doubtedly were, entirely competent to do it again on American shores; so they viewed with little concern a thing so insidious and impalpable as the loss of national specie, which they rarely had seen. They had bank-notes from their own bank, and were disturbed, if at all, when the bank appeared to enjoy too great a monopoly. If the average member of Congress had called his constituents together and asked of them their opinion as to a monetary convention with Great Britain, they would very likely have declared such a step entirely unnecessary, on the ground that the United States could take care of them- selves and the British might attend to their own affairs. Eco- nomic principles have not made sufficient headway, even unto this day, to entirely eliminate this so-called national feeling. Characteristic, in varying degrees, of all countries, it has al- ways been an obstacle to congruity in commercial arrange- ments and has played an important part in preventing mone- tary agreements and a uniformity in coinage. As a popular 14 THE LATIN UNION sentiment, it doubtless has been and is, so far as it remains, a source of strength which any nation may be proud of, but it would not have suffered in quality by a limitation of its ap- plication when interfering with an intelligent appreciation of the great advantages to be derived from measuring com- modities and financial obligations with accuracy and honesty. By 1834 the absence of specie had become sufficiently ag- gravating to induce Congress to do something, and under the leadership of Benton the ratio between gold and silver was changed from 15 to 1 to 16 to 1. The professed, and, evi- dently, real purpose of this legislation was to reinstate gold in the currency. It was the deliberate intention to rate gold too high, to put a premium on it, so that the product of the newly discovered mines in the South might be kept in the country and foreign gold might be imported. If the premium simultaneously put on the exportation of silver was thought of, there was no worrying over it. Congress was not uninformed of the advantages of adopting a ratio in harmony with that prevailing in some of the larger European states, but uniform- ity was not the purpose. The adoption of the French ratio was urged, some gold monometallists have held, by those who simply desired silver monometallism; but, on the contrary, it seems clear that it was honestly advocated with the single view to uniformity. Another effort was made to secure the ratio of 15.85 about the English mint ratio but that was also voted down, by a majority determined, as Calhoun plainly said, if any mistake were to be made, to favor gold. By mak- ing the relative value 1 6 to 1 another discord was added to the monetary conditions of the world with its varying ratios, ar- tificially affecting the natural flux of the precious metals. If the French ratio had been adopted, a closer assimilation in coinage might not have followed in the next generation when the subject attracted general attention, but it would have been possible and probable. A coinage union with France would THE ACT OF 18M 15 have greatly changed the future course of monetary events, at least, and it is doubtful if there would have been a Silver Ques- tion in the nineteenth century. In his " Thirty Years' View," Benton himself declared that " the French ratio was the ratio of nearly all who seemed best calculated from their pursuits to understand the subject; " but for other, and, as he thought, practical reasons, he favored the ratio of 16 to 1, around which the friends of a gold currency rallied. A slight change was made in the ratio in 1837 by adding a trifle to the weight of gold coins and reducing the fineness for the purpose of con- forming more closely to the decimal system. It was unim- portant in its effects. There was considerable boasting over the gold coins which soon made their appearance and which were popularly dubbed " Benton Mint-drops " or " Jackson Yellow-boys" ; it was natural to seek to make political capital of them before a people which, up to that time, had seldom seen an American coin. But the pleasant experience was all too brief. The flight of the larger silver pieces did not appear alarming so long as there were substitutes, but soon the old and worn frac- tional pieces followed, and the plain people, who so admired Jackson, found themselves greatly inconvenienced by a lack of change, which, rather than gold, was always the medium of their everyday transactions. Half-dollars, quarters, dimes, and half -dimes were turned out of the mints from 1834 to 1850 to an amount almost as large as the coinage of gold. A few silver dollars were struck something that had not occurred at the mint for thirty years but everything in the shape of silver was immediately exported. Matters became still worse when gold began to pour into the mint from the newly discovered mines of California. But for the use of small notes, in varying degrees of depreciation, the domestic trade and industry would have been hampered more than it was. In 1851 the law creating the silver three-cent piece, three-quar- 16 THE LATIN UNION ters fine, was passed, and more than a million dollars' worth were coined in three years in the effort to supply the deficiency. Standard silver coins rose to a premium of 5 per cent., and the total silver coinage fell from $2,558,580, in 1846, to only $774,397 in 1851, and in 1852 more debased three-cent pieces were coined than of all the other denominations put to- gether. They alone would circulate. The result was the law of 1853, which reduced the weight of half-dollars from 206^ to 192 grains, and of the lesser coins proportionally, while their legal tender was limited to sums of $5, and their coinage to government account. In adopting this law Congress chose, as it considered, the least objection- able of two alternatives. It had either to increase the value of gold in gold coins or reduce that of silver in silver coins. By taking the former course the possibility of again losing gold had to be faced; by taking the latter both metals might be kept current, but silver would be entirely subsidiary and the standard would be gold, as in England, which kept its silver in circulation by debasing it. One serious objection to the former course was that the coinage of gold had become so great that the government could not afford to recoin so much unless there appeared to be some great compensating ad- vantage, and they saw none; indeed, they wanted the gold standard and said so, being fully aware of what they were do- ing. In introducing the bill which afterwards became the act, Representative Dunham, on behalf of the Committee on "Ways and Means, said: " Another objection urged against the proposed change is that it gives us the standard of gold only. What advantage is to be gained by a standard of the two metals which is not as well, if not better, obtained by a gold standard I am not able to perceive, while there are very great advantages resulting from it, as the experience of every nation which has attempted it has proved. Indeed, it is utterly impossible that you should maintain a double standard. Gen- tlemen talk about a double standard of gold and silver as a thing that exists, and that we propose to change. We have had but a single standard for the last three or four years. That has been and THE ACT OP 1853 17 is now gold. We propose to let it remain so, and to adapt silver to it and regulate It by It." It has been too commonly overlooked in recent discussions that the " dollar of our daddies " was thus lightly esteemed by the " daddies " themselves. With a proper understanding of the manner in which the question of standards was regarded in the fifties and sixties, and by carefully following the de- velopment of events, the misapprehensions which have so con- fused the Silver Question in recent years can be largely avoided. We shall see later and the more we progress in this study that apparently the human mind is quite differently affected by a sudden and marked appreciation in gold and a similar depreciation in silver. Governments in Europe had been laboring with the same problem, and were favoring practically the same course, though warned by some eco- nomists that, with another flood of gold coming in from Aus- tralia, gold would have to be demonetized. But from no quarter, so far as I have been able to observe, came any suggestion of an international conference or con- vention to attempt the regulation of the relative value of gold and silver. Each nation showed anxiety to keep its own specie, too well satisfied with the new wealth of gold to take any steps against it, and needing silver for change too much to think of any other course than overvaluing it at the mints. In order to preserve their silver they debased it, thus, in effect, instituting the gold standard, a standard of the cheaper, the depreciated metal. While mints were nominally open to silver at old ratios, holders of bullion naturally declined to convey it there to be stamped for less than it was worth. It was also true that political conditions in Europe and other cir- cumstances offered no inducements for international action as to the ratio, had any nation requested it. But other subjects were frequently suggested for such 18 THE LATIN UNION action, and, among them, the old one of uniform weights and measures and of the decimal system, on the merits of which a polemic discussion had been going on in England for some time. It will now be interesting to watch the development of this idea and to observe its outcome. At the International Exhibition at London in 1851 scien- tific assemblies discussed extensively a common system of weights and measures, and also of coins, but nothing was done, though at its close the London Society for the Encouragement of Art, Industry, and Commerce informed the government that it would be well to consult the neighboring nations, to see if measures could not be taken to hasten the adoption of a uniform system for the entire world. The International Statistical Congress at Brussels, in 1853, debated the subject still further, but could not agree on any proposal. At the next Statistical Congress, which was held in Paris two years later in connection with the Exposition, Louis Napoleon, who had shortly before been declared Emperor, used his efforts to secure the extension of the metric system ; but here also there was a failure to agree upon a plan of concerted action, though a large number from the juries and committees of the different countries signed a declaration strongly urging uniformity in weights, measures, and coins. Informed of these facts and observing also the active agita- tion of the subject in England by the Decimal Association and others, the Congress of the United States revived the subject, and in 1856 passed a joint resolution directing the Secretary of the Treasury to appoint a commissioner to confer with the proper functionaries of Great Britain " in relation to some plan of so mutually arranging, on a decimal basis, the coinage of the two countries that the respective units " should be thereafter easily and exactly commensurable. The finance committee of the Senate, in reporting the resolution, remarked that " no measure could be readily suggested the realization of which SEEKING A CONFERENCE WITH ENGLAND 19 would mark a more decided epoch in the history of commerce." It might have been possible, apparently, for the commissioner appointed under this resolution to have entered into a con- ference comprehending the whole question of coinage with an identical relation between gold and silver coins, but the decimal basis and not the ratio was the point Congress had in mind at this time. A commissioner with such general in- structions went to England, conferred with the Derby minis- try, and, returning, reported, in January, 1859, that, " al- though the British government were not prepared themselves to take the initiative with reference to a project that could not be carried out by them without parliamentary sanction, they were prepared to consider and confer with respect to any pro- posal that the commissioner might be instructed to make in be- half of the government of the United States." ISTo further prosecution of the negotiations resulted, and the United States were soon too engrossed in serious domestic affairs to originate any project for proposal. But even in the throes of civil war, when our specie had completely disappeared from circulation, it continued to be the subject of consideration and discussion. Only a few days before the government suspended specie pay- ments, Salmon P. Chase, Secretary of the Treasury, in his annual report, invited the attention of Congress to the impor- tance of uniform weights, measures, and coins, and to the worth of the decimal system in the coinage of the world. Con- gress had more important matters to think about, and England was treating the cause of the Union with scant courtesy. Nevertheless, Secretary Chase renewed the suggestion in 1862, stating that " the present demonetization of gold may well be availed of for the purpose of taking one considerable step towards these great ends." It is well to notice here the secretary's remark concerning the demonetization of gold. Had it not been his understand- ing, as it was of every one else after the act of 1853, that gold 20 THE LATIN UNION was the standard, he would naturally have coupled silver with gold in his statement referring to demonetization by the sus- pension of specie payments or by exportation. The theory of ^ the gold standard was accepted by common consent and was not conceived in ignorance or in malice towards silver. The secretary evidently had only the possibilities of gold in mind in all he had to say upon the subject. " If," he continued, " the half-eagle of the Union be made of equal weight and fineness with the gold sovereign of Great Britain, no sensible injury could possibly arise from the change, while, on resump- tion of specie payments, its great advantage would be felt in the equalization of exchange and the convenience of com- merce. This act of the United States, moreover, might be fol- lowed by the adoption by Great Britain of the federal deci- mal divisions of coin, and thus a most important advance might be secured towards an international coinage with values deci- mally expressed." That commercial bodies and the government of the United States, even in a severe civil strife, should have continued to advance these propositions is not, perhaps, so strange as it seems, for they were being agitated in Europe, and an eco- nomic opinion in their favor was fast crystallizing. Attention had been drawn to them in Germany in the discussion over the monetary treaty of 1857, already referred to, a discussion which was the beginning of that movement for monetary re- form culminating in 1873. The International Statistical Congress at Vienna in 1859 made another declaration in favor of uniformity, and in 1862 the English House of Commons went so far as to appoint a committee, and, on its report, the metric system was made legal and optional. There was some talk of instituting decimal coinage, but the matter was con- sidered premature. By 1862, when Secretary Chase made his recommendations, the advocacy of the reduction of existing units of money to a small number on a decimal basis had be- INTERNATIONAL UNIFORMITY IN COINAGE 21 come quite general among commercial bodies and economists. Another Statistical Congress, held at Berlin in 1863, at which the nations were generally represented, voted unanimously that the different governments " be invited to send to a special congress delegates authorized to consider and report what should be the relative weights in the material system of gold and silver coins, and to arrange the details by which the mone- tary system of different countries " might be fixed, upon a single unit decimally subdivided. This congress, though not convened to consider monetary questions especially, may be regarded as the starting-point in international deliberations on the subject. No general as- sembly of nations by delegates duly accredited had ever before been held in which the question of general monetary unifi- cation had been so openly and seriously discussed. Before that the advocacy of unification had been principally confined to weights and measures, but in 1863 that phase of it was subordinated to uniform coinage and wellnigh laid aside. The representative of the United States was Samuel B. Ruggles, a leading member of the New York Chamber of Commerce, a statistician and economic student of high repute in this coun- try. He found at Berlin a large and influential delegation from Great Britain zealously engaged in an endeavor to unify the money of the world. A special committee composed of delegates of fourteen different governments was appointed to consider the subject, and it made an elaborate report, mainly prepared by Samuel Brown and Prof. Leone Levi, of King's College, London, recommending the decimalization of the pound sterling and the making of it a monetary unit. It further proposed in respect to silver coins that the dollar, re- duced in value to 5 francs, the florin, made equal in value to 2-J francs, and the franc itself should be units, all of them deci- mally subdivided. The delegates of the United States objected to the adoption of the four units, mainly on the ground that it 22 THE LATIN UNION would tend to preserve the double standard of gold and silver, and thus, to use his words, " prolong the vain attempt to fix by legislative enactment the relative value of the two metals, in their nature necessarily mutable and governed only by the fundamental law of supply and demand." In the course of the discussion, a suggestion was made by Dr. Farr, Register- General of the United Kingdom, and one of the most dis- tinguished of the British delegates, that the gold dollar of the United States should be made equal to one-fifth of the Eng- lish sovereign. To this Ruggles replied in behalf of the United States that both the sovereign and the half -eagle should be reduced to the value of 25 francs, thereby unifying at once the gold coinage of the three nations. The difference of opin- ion on this point between the delegates of Great Britain and of tho United States led the Congress to adjourn without making more than a general declaration and asking for a special con- gress to devise a plan. Had England's proposition been ac- cepted at this moment, when the enthusiasm of some of her leading men was at its height, it might in time have led to international bimetallism and changed the whole course of monetary events. But the sentiment for a single gold stand- ard had gained too much headway, especially among the nomi- nally bimetallic states. This gradual movement towards international action on the money question was stimulated by various conditions in differ- ent countries. Moreover, the period from 1850 to 18G5 was one of earnest scientific thought everywhere, and largely upon new lines. We cannot fail to distinguish points of similarity between this time and the period of the renaissance in the six- teenth century, the latter following the influx of precious metals from the !N"ew World, and the former following the most remarkable increase of gold production in history. A new drift had been given to thought by the writings of such men as Darwin, Huxley, Tyndall, and Spencer. There was ANOTHER RENAISSANCE 23 a disposition to find a scientific basis and an evolutionary rea- son for everything even the world's monetary systems. Nothing but the logical would hold, and the double standard seemed illogical. It was believed, also, that the double stand- ard had failed in practice, though with such diversity in de- creed ratios it could hardly be otherwise. At this same period the world recognized an expansion of international feeling, due directly, perhaps, to the development of steam-power and to the discovery of the untold possibilities of electricity. Interna- tional congresses began to be common. Besides the statis- tical meetings to which reference has been made, the Postal Congress in Paris, in 1863, first suggested by the United States, is a notable example. There also, as the delegate of the United States reported, the question of uniform coinage was extensively discussed, " on the side." But while affairs were thus slowly working to bring about an international monetary conference, the French Emperor saw an opportunity to act with more dispatch and with greater glory to the French name. Louis Napoleon was in the zenith of his imperial power. The world has quite fully appreciated his weak points, not so his strong ones. Cold, calculating, silent as the grave, as ambitious and, upon occasion, as un- scrupulous as any monarch who ever lived, he did not hesitate to play for the highest stakes. His timidity in the face of un- favorable conditions was no more remarkable than his desper- ate audacity when they seemed to favor him, and his faculty for quickly perceiving an opportune moment, generally with accuracy, was inherited from his celebrated uncle, and trained by constant use in early life, the dream of which w r as the throne of France. Before 1848, often in mean obscurity, though a Napoleon, he was regarded by the French leaders with con- tempt. When he suddenly appeared at Paris at the time of the overthrow of Louis Philippe, the delegates considered him too innocuous to require them to take the trouble to impose 24 THE LATIN UNION banishment; yet within two months he was elected to the Na- tional Assembly from four different departments, and before the close of the year was chosen President by an overwhelming majority over the greatest statesmen of the time in France. The so-called coup d'etat of 1851 required uncommon au- dacity, but it was characteristic. He saw his chance, seized it, and succeeded. Step by step, each time by the overwhelm- ing sanction of the French people, he kept his course, and in 1862 he was the first monarch of Europe. " He had overawed England, defeated Russia, and treated Italy as a magnanimous patron." Under his command the French arms had again ac- quired something like the old Napoleonic glory, in Eastern wars, and at Magenta and Solferino, completely breaking Aus- tria's power over the South German states. Neither a fool nor a man entirely a knave could have accomplished so much, even with the French spirit, for his ambition was not confined to the possible glories of war. He had made Paris the first city in the world, tearing down the old rookeries in which revolutions had been hatched, and running over their sites magnificent boule- vards. He did much to build up the commerce of the coun- try, to develop its railroad system and its mining and manu- facturing interests. The French people, freed from anarchy for several years, and directed into industrial channels, be- came as a nation more practical than ever before and more prosperous. Largely by the Emperor's energy, the Suez Canal had become a reality, and more than any other monarch of those days he dabbled in political economy in search of ways to extend the French name and influence. While dreaming of a new imperialism in Mexico, he was also watching the new economic movement among the nations watching for op- portunities. In 1863 he saw one. He had studied the development of the sentiment for an international conference on the subject of weights, measures, and coinage, and upon every opportu- NAPOLEON PERCEIVES AN OPPORTUNITY 25 nity had cultivated a scientific opinion in favor of French methods. It was not like Napoleon to wait until some other nation gained the fame, and, perhaps, the advantage of taking the initiative. He was quick to see that, if the United States adopted for their half-eagle the weight and fineness of the English sovereign, as Secretary Chase was proposing, it would not only be of great advantage to England, but would compel France to change her whole coinage system without getting any glory from it. His agents were active at the Postal Con- gress and at the Statistical Congress in 18G3, and four months later he sent out letters inviting all the sovereigns of Europe, or their deputies, to another congress, ostensibly for the pur- pose of settling various questions which appeared to threaten the peace of Europe. The Continental states assented, but England, whose plenipotentiaries had not long before quit Mexico upon observing the Emperor's real purpose there, de- clined the invitation on the ground, as stated by Lord Russell, that such measures of prospective legislation were more likely to embroil the several powers than to establish peace. The project was, therefore, abandoned, and has always remained something of a mystery from a political point of view. The career of Louis Napoleon offers little ground for the belief that he cared so much for peace if he saw that war might afford him greater opportunities. But just at that time he was interested in preserving a season of peace with France at its centre. He had in mind for the near future a great Inter- national Exposition, to be held at the newly beautified Paris, something that would impress the world with the glories of the second Napoleonic regime, and at the same time afford op- portunities for international gatherings for the consideration of such subjects as the unity of coinage. The idea had been quietly fostered at the Postal Congress, and for some time the various governments were prepared for the decree which went forth early in 1865 for the exposition of 1867. 26 THE LATIN UNION One of the first steps for its promotion was the formation of the Imperial Commission, with Prince Jerome Napoleon as its head. It was a body not only French, but Napoleonic. It set to work to prepare for the organization of the different de- partments of the fair, and one of its first steps was the organiza- tion of a scientific commission, an act approved by the Em- peror in July, 1865, the objects of which were, according to the act, first, to indicate the best means of representing at the fair the recent advances of science, and, second, to contribute to the extension of the employment of useful discoveries and "to encourage reforms of international interest, such as the adoption of uniform weights and measures, identical scientific unities," etc. It was composed of Frenchmen appointed di- rectly by the Imperial Commission, and later foreign mem- bers were added by appointment of different governments, ap- proved by the Imperial Commission. While this commission was at work, and to some extent as a result of its work, the Latin Union was formed. It may be too much to assume that Napoleon was so deep a schemer as to have planned this union for the effect it would have upon an international monetary conference which he had determined to assemble, if he could, at Paris, during the exposition. So far as external appearances go they were very unsafe guides to Napoleon's diplomacy the Latin Union seemed the nat- ural result of circumstances which France was compelled to recognize, and of which she took wise advantage, but it will pay to study it in the light of associated events. This con- ference at Paris in the fall of 1865 was the first important monetary meeting on international lines, the only one that ever resulted in a treaty, and, whether intentionally or not, it, in a great degree, moulded the character of the general mon- etary conference at the same place two years later, from the economic effects of which grew the Silver Question. To clearly apprehend the professed reasons for the forma- SILVER DRIVEN OUT OP FRANCE 27 tion of the Latin Union, it will be well to refer again to the relative condition and value of gold and silver, especially as they affected France. The value of bar silver at the average quotations in London per ounce, British standard, the approxi- mate intrinsic vahie in francs and its fractions of the 5-franc piece, and the average ratio of silver to gold were, for the ten years previous to the conference of 1865, as follows: Year. Pence. Francs. Ratio. Year. Pence. Francs. Ratio ia55 61.313 5.04 15.38 1860 61.688 5.07 15.29 1856 61.313 5.04 15.38 1861 60.813 5 15.50 1857 61.750 5.07 15.27 1862 61.438 5.04 15.35 1858 61.313 5.04 15.38 1863 61.375 5.04 15.37 1859 62.063 5.10 15.19 1864 61.375 5.04 15.37 Since 1813 the commercial ratio of silver to gold had averaged less than 16 to 1, and only once since 1851, in 1861, had it averaged as high as 15.50 to 1. The effect on French silver coins may be imagined. The 5-franc pieces disap- peared. Whereas all large payments were formerly made in sacks of 5-franc pieces, soon after the gold discoveries they were made in gold, and the old 5-franc pieces were either ex- ported or melted down and replaced by gold coins. That metal being depreciated as to silver, there was a sure profit to speculation. But while the diffusion of small gold pieces pre- vented serious inconvenience at first, a new difficulty was en- countered when, the 5-franc pieces having disappeared, the fractional coins, 2 francs and less, began to vanish under the speculator's wand. This difficulty appeared later in France than elsewhere, and it was not till 1864 that she followed the example of other countries in reducing the fineness of smaller silver coins. But, unfortunately, the steps taken by different governments had shown no uniformity. Although Italian coins had the fineness of .835 that adopted by France Switzerland had chosen that of .800. France soon saw rea- son to fear that the Swiss coins, introducing themselves into circulation by way of the eastern frontier, would usurp the 28 THE LATIN UNION place belonging to the national coin. In fact, the government reported that Swiss coins had already penetrated into some French provinces, giving rise to disputes and doubt in transac- tions between private persons. In April, 1864, therefore, the government prohibited the admission of Swiss coins in public offices of receipts. Meanwhile, Belgium had instituted an examination into the question of the diminished fineness of its silver change, and, in correspondence with the French government on the subject, the utility of a treaty between the four nations whose monetary systems rest on numeration by francs was suggested. Napoleon at once dispatched invitations to the governments of Belgium, Switzerland, and Italy, to send delegates to meet its ow r n representatives at Paris. While the situation was such as might suggest this action, it is difficult to believe that it was so serious as to have led to it at that time had there not been other motives at work. The sole cause of disturbance was a difference of 35 thousandths in the fineness of Swiss fractional coins, with those of France and Italy. That France should w r orry over the introduction of a few Swiss coins into her territory, displacing national coins, and then form a treaty making all coins of three states legal throughout her territory, is not easily understood. Her en- trance into such an important alliance in the midst of prepara- tions for an unparalleled exposition shows a haste which the emergency did not seem to warrant. The conference opened on November 20, 1865, under the presidency of Parieu, Vice- President of the French Council of State, an extensive writer upon coinage questions and the manager of the French pro- gramme. The other French delegates were Pelouze, Minis- ter of Finance, Ilerbet, representing the Ministry of Foreign Affairs, and Julien, representing the Ministry of Agriculture, Commerce, and Public "Works. Belgium's delegates were Frederic Fortamps and M. A. Kreglinger; Italy's, Isaac Ar- QUADRIPARTITE AGREEMENT OF 1863 29 torn and Valentin Pratolongo; Switzerland's, Dr. Kern, Min- ister to France, and Charles Feer-Herzog, member of the Swiss National Council. As a result of the deliberations of these delegates, con- vened to remedy the slight diversity in Swiss and French frac- tional coins, an agreement was made to unite in the regula- tion of the weight, title, form, and circulation of their entire coinage, of gold and silver, for fifteen years. The preamble of the articles of agreement stated that the four powers, " ani- mated by the desire to effect a more perfect harmony in their monetary legislation, arid to remedy the inconvenience to trade between their respective countries resulting from the diversity of their small silver coin, and to contribute to the uniformity of weights, measures, and coins, by forming a monetary union," therefore resolved to conclude a convention for the purpose. The articles show that the desire to contribute to uniformity of coinage on the basis of the franc was the greatly predominating consideration. They bound themselves not to coin or permit to be coined any gold other than pieces of 100, 50, 20, 10, and 5 francs in weight, standard, tolerance, and diameter, set forth in detail and practically from the French mint regulations. They were to receive any of these coins within their territory unless worn to ^ per cent, or their de- vices effaced. They could coin silver 5-franc pieces, of the qualities specified, to be received in the different countries under the same conditions laid down for the gold coins. The smaller silver pieces thereafter were to be only those of 2 francs and 1 franc, and 50 and 20 centimes, of a fineness of .835, and of other qualities specified. Pieces of a different coin- age were to be withdrawn from circulation by January 1, 1869, with a year's further extension for certain coins. Pro- vision was made for the limited legal tender of the small silver coins between individuals, and for the public banks, and for their redemption by the respective governments, which should 30 THE LATIN UNION not issue them to an amount greater than six francs for each inhabitant, with certain exceptions. One section, and an im- portant one, provided that any other nation could join the con- vention by accepting the obligations and adopting the mone- tary system of the union, and fifteen years was fixed for the duration of the treaty, whereupon it might be extended. The French programme was carried out to the letter, even to the retention for the time of the double standard, in spite of the fact that the delegates of the Belgian, Italian, and Swiss governments unanimously and earnestly expressed the desire that the principle of the gold standard should exclusively pre- vail in the formation of the union. Because France opposed the change at the time, it has been assumed to be another in- stance of her heroic devotion to and defence of the double standard. As a matter of fact, France did not defend the prin- ciple of the double standard at all on this occasion. Her dele- gates replied to those of the other states, who could have out- voted France, that " common-sense undoubtedly decided for the gold standard " ; that it was logical, but the question was " premature." Undoubtedly it was premature in .Napoleon's programme. He preferred to let matters wait till he had as- sembled all the nations in a monetary conference, and then, in the face of a probable demand for the gold standard, seem to yield the double standard in consideration of the adoption of the French coinage as a basis for monetary unity. One pre- requisite of success in negotiations is to have something to yield, a point which, as will be seen, the United States have neglected in later monetary conferences. The French dele- gates were at heart partisans of the gold standard. Parieu was one of the strongest gold monometallists that France ever had, and, as has been said, was the diplomatic manager of Na- poleon's programme. The seeds of silver demonetization had already been planted. The difficult experiences in keeping silver in circu- GOLD STANDARD SOUGHT IN INDIA 81 lation had a good deal to do with it, but the filling of the cof- fers of the great banks of Europe with the virgin gold of Cali- fornia and Australia had more. The increase in commercial activity was commonly attributed to the pouring in of the yellow metal. 1 The reason why the bimetallic states had not already formally adopted the gold standard by law was that they had it in practice. It was really in silver states like those of Germany states, the reader will notice, having a standard of the appreciated metal that the agitation for the gold basis seemed most pronounced. The question was even mooted in India, the " sink of silver." Many Anglo-Indian authorities at this time, fearing that silver might become still more costly in relation to gold, and that the Indian currency would become stinted, thereby causing a fall in prices and serious inconvenience, deemed it desirable to seize the oppor- tunity to adopt the gold standard, while retaining silver as much as possible in circulation, and extending the issue of notes. On account of the earnest discussion, the Indian gov- ernment directed specific inquiries to be made. Sir William Mansfield (late Lord Standhurst), then a member of the su- preme executive council of India, argued for gold with so much skill that many thought the time had come to make the change. But the financial secretary, and a majority of the functionaries, who, paid for their services in silver, gained something on their remittances to England, were loath to dis- i " We find here [in Great Britain] our external trade doubled in the last twelve years, and this external trade is, we believe, but a faint representation of the increase of transactions throughout the whole of our domestic industry. But not only has this multiplying process been carried on in these islands; it has prevailed almost as largely in France, and has spread all over Germany. It has filled Italy, aroused Spain from its long lethargy, and penetrated even the remote provinces of Russia. No corner of Europe has remained insensible to the new stir of industry and enterprise. All these facts are indications of the enormous addition which has been made dur- ing the last fifteen' years to the. extent and depth of the channels of circulation required to be filled with metallic money in some form or other." London Economist, May 11, 18G5. 32 THE LATIN UNION turb the long-accepted standard. A compromise was suggested by which gold should be attracted into circulation as a legal tender, while retaining silver as the standard, and an attempt in this direction was made by declaring the English sovereign legal tender for ten rupees, an act which went into force in December, 1864, but was revoked four or five years after- wards on its being found that the coins fetched more in rupees. It is essential to observe closely the course of silver at this particular time. The treaty of the Latin Union was duly ratified by the several states, and went into effect August 1, 1866. A marked change appeared in the French silver coin- age the next year. From 1860 up to the beginning of 1867, the average number of 5-franc pieces coined at the French mints was about 40,000. For the next four years the number was : 1867, 10,810,312 18G8, . . . . . 18,724,110 1869, 11,652,857 1870, 10,729,670 In other words, the average became 300 times greater. But this increase was not because of the treaty, though it is a curi- ous fact that the price of silver, which was 62^ pence in June, was only 60|- in August when the treaty went into effect. It was at this time that silver, after being, with hardly an in- terruption, at a premium as to gold, dropped below the French parity. Since April, 1867, it has never for a moment reached it. The average intrinsic value of the 5-franc piece in 1866 was 5.022, in 1867 it was 4.981. Yet the demand for silver for coinage in Europe has seldom been more active than it was then. Not a single nation had demonetized the metal. Only two nations in all Europe had the gold standard by law, England and Portugal, and the latter made little difference. Southern Germany had no gold coinage at all. The marked increase in the production of silver had not begun. What and where was the cause of this beginning of the BEGINNING OF SILVER'S GREAT FALL 33 decline? One might think that, the coinage of legal-tender silver in France jumping from 185,000 francs in 1866 to 54,000,000 in 1867, the price would have stiffened; but it is also observed that the export of silver from the empire fell from 195,000,000 francs in 1866 to 60,000,000 in 1867. For twelve years before 1865 French exports of silver had exceed- ed imports, even as much in one year as 350,000,000 francs. In 1865, the opposite tendency began, imports exceeding ex- ports 70,000,000 francs; in 1866, 40,000,000, and in 1867 by 180,000,000. The trouble, apparently, was a falling off in the export demand for silver, altogether out of proportion to the demands for its coinage and circulation at home. Turn- ing to India, the great absorber of the metal, we find that her importations of silver amounted to 475,000,000 francs in 1866, 1 and to only 204,000,000 francs in 1867, 1 or considera- bly less than one-half. No increase appeared in the council bills sold ; it was simply a decrease of about one-half in the total remittances to India. There was not simply a decrease in the Indian exportations of merchandise, but a sudden falling off in the investment of English capital in the colony, particularly for railroads. We shall have occasion to treat of these facts more fully in the history of the next decade. They are sug- gested here to indicate the nature of the change that took place at about the time the Latin Union treaty went into effect, changes which cannot be attributed to the treaty, but which produced remarkable effects on the silver coinage. It so hap- pened that the union was formed at the very beginning of sil- ver's great decline, the initial cause of which must be laid at the doors of British India, which, late in 1864, took a step towards the gold basis. This cause alone, however, would not have produced a permanent depreciation. It was followed by a most remarkable combination of circumstances. Fiscal year ending March 31. CHAPTER II GENERAL ACCEPTANCE OF THE PRINCIPLE OF THE GOLD STANDARD - CONFERENCE OF 1867 EVENTS were shaping themselves very nicely for Napoleon's purposes. The " silent " man was not a dull man. He was well aware that a monetary union, composed of France, Italy, Belgium, and Switzerland, would be a much more important factor in the general conference he proposed making a feature of the exposition than France would be alone. In speaking of uniform coinage at the time, a representative of the French government said : " This convention between the four powers is a first step that will have its influence. It proposes and in- vites future conventions. If the question comes up hereafter before higher powers, as we hopa it will, France will bring a great influence with her forty millions, or, if expected an- nexations are realized, her one hundred millions of people using her monetary system." The inference is plain. Na- poleon closely watched developments everywhere, and his political agents gave generous encouragement to any move- ment favorable to his designs. He kept his hands off while the Prussians overthrew the Austrians in the Schleswig-Holstein war in 1866, it is generally said, because he was checked by political antagonism in the Chamber, some champions of the old republicanism having been successful in elections; but it is more probable that he remained passive from choice, and because of the pacific economic policy dear to him for the mo- ment. The success of his great exposition and of his monetary programme depended largely upon his neutrality and the peaceful condition of Europe. When, in 1866, Secretary Sew- INTERNATIONAL COINAGE URGED IN CONGRESS 85 ard insisted on the recall of the French troops from Mexico, Xapoleon did not show the resistance and delay that- the oppor- tunities afforded him, or that might have been expected from his character. The tearful appeals of Carlota were in vain. The fate of an Austrian prince was sealed in his economic campaign. The French government was active in the latter part of 1866 in efforts to secure annexations to the Latin Union. Dif- ficulties appeared in the way of this, but as to the general sub- ject of uniform coinage the other nations stood in a responsive position. It was extensively discussed in England, and money reform was one of the conspicuous features of that movement in which all the German states were drawing closer and closer to Prussia. German economic opinion was already for gold. The Treasury officials and finance committees of the United States, however, said very little about gold or silver, for the principle of the gold standard was accepted without question, but they emphasized the old provocation for international action the decimal system. John A. Kasson, who had rep- resented this country at the Postal Congress of 1863, where Xapoleon's agents were active, submitted to the Thirty-ninth Congress, in May, 1866, a report of the coinage committee, devoting much space to the discussion of the possibilities of the general acceptance of the decimal system. He suggested that the occasion of the Paris Exposition the following year would " furnish the proper opportunity for a free conference between the authorized commissioners of the different governments as to the best means of establishing a uniform system of coinage for the common use of the nations of the world. The only in- terest of any nation," the report went on to say, " that could possibly be injuriously affected by the establishment of this uniformity is that of the money-changers an interest which contributes little to the public welfare while by diversity of coinage and of values it adds largely to private accumula- 36 THE CONFERENCE OF 18C7 tions." One paragraph in the document indicates how little question there was in the United States as to which metal should constitute the standard of value. It reads : " The only indispensable condition of this uniformity of value is, that in the standard unit, with its divisions and multiples used in com- merce, there shall be in all countries an equal amount of gold (or silver) with fixed proportion of alloy. Each nation will retain its own devices and legends, and other peculiarities of mintage. A common name for the standard unit would be desirable, but not essential. The presence of a given amount of precious metal, mixed with a given amount of alloy, is the only absolute prerequisite for the establishment of interna- tional uniformity of coinage." The parenthetical appearance of silver after gold is sug- gestive. It wears the livery of an afterthought, as if the first draft of the report had not contained it, but, upon re-reading and reflection, it had occurred to the writer or to some one on the committee that silver ought at least to be mentioned out of courtesy, if not as a possibility. Naturally, it would be, in view of the fact that it was at that time either the sole standard of value, or, in theory, a collateral standard with gold in every nation of importance in the world, except the English. But in practice, silver had, as the dearer metal, be- come so subsidiary that the theory was almost lost sight of in the fact. This was especially true in the United States, which were proceeding on a paper basis. Everybody, in speaking of specie, meant gold, without considering it a matter demanding any qualification, and without being in danger of injuring any one's feelings. Only those who had made a study of financial questions, and such persons were rare in this country then, thought of the double standard as existing even theoretically. Few in that generation had ever seen a United States silver piece of full legal tender. They were as rare as coins of the fifteenth century. IMPERIAL COMMISSION AT WORK 87 This government could not have been in a more favor- able position to enter into an agreement as to coinage, for it could yield with little inconvenience to a variation of its dollar if necessary, its coin being withdrawn from cir- culation. Moreover, it seemed probable then that the con- sent of the United States, England, and France would ulti- mately result in the consent of all commercial nations. Not being aware, apparently, of what was going on in the mind of Louis Napoleon, the House of Representatives, acting on Kas- son's report, early in 1866 passed a resolution authorizing the President " to appoint a special commissioner to facilitate the adoption of a uniform coinage between the United States and foreign countries " ; but it was delayed in the Senate and finally abandoned, Napoleon's diplomatic steps having come to light. The State Department had for some time been in- formed of the general purposes of the French Emperor, though his motives seem to have escaped detection. After the treaty of the Latin Union went into effect, the Imperial Commission devoted its attention with much assi- duity to this branch of its duties. Several meetings were held and attended by the members of the Scientific Commission and such of the foreign commissioners to the exposition as were already at Paris. The first session, officially entitled a " Pre- paratory Conference Relative to the Establishment of an Inter- national System of Measures, "Weights, and Coins," was held May 2, 1866, and was presided over by Le Play, the French Commissioner-General. The tTnited States were represented by N. M. Beckwith, an eminent American merchant who had been appointed Commissioner-General for this country. The result was that at a later meeting, and at the suggestion of Prof. Leone Levi, of London, it was decided to have an exhi- bition of coins of various nations, to appoint an international committee to supervise it and to take whatever steps it deemed best for drawing public attention to the subject of 38 THE CONFERENCE OF 1867 uniformity in coins. Commissioner Beckwith kept Secretary Seward fully informed of all these steps. Early in July lie sent to the State Department a copy of the treaty of the Latin Union, which had just been ratified by France, and hinted that the United States could easily adapt its coinage system to that of the new union without substituting the French unit for their own. " Our gold dollar/' he said, " is equal to 517 cen- times. A reduction of 17 centimes (3^ cents) would leave it an exact multiple of the French unit, or franc, and the equivalent of five francs." In October, Secretary Seward notified Beckwith of the ap- pointment of Samuel B. Ruggles, of J^ew York, as one of the scientific commissioners for this country, and for the special purpose of acting in relation to uniform coins. Congress, by a law passed the previous July, had made the metric system legal and optional in the United States. Napoleon waited while these operations were going on, till Prussia had finished measuring arms with Austria, and till the close of the sharp correspondence with this country over Mexico, before setting his diplomatic machinery actively in motion in behalf of the Latin Union. When peace was finally restored in Europe, and the imperial dream of Latin political influence on the western continent was over, he brought the subject plainly to the attention of the various governments. It was on January 4, 1867, that Berthemy, the French minister to this country, officially transmitted to Secretary Seward a copy of the treaty of the Latin Union, with an explanation of its provisions, and a polite invitation to the United States to ac- cede to it; or, if not desiring to do that, to either enter into arrangements destined to establish equations between some of the monetary types of gold and silver, or to take part in an in- ternational conference at which might be discussed the means of arriving at a more extended monetary understanding. The treaty of the union, he assured Seward, " had a sole object, that FRANCE SEEKS ADDITIONS TO THE UNION 39 of putting an end to the abnormal disappearance of fractional silver money," which was doubtless " diplomatically " true, though, in the extensive plans of Napoleon, the treaty in- cluded a good deal more and served other and far-reaching purposes. Commenting on the conveniences the four states of the union enjoyed in conducting their gold and silver coinage under identical conditions, Berthemy added : " After having brought about the disappearance of divergencies of which they recognized the inconveniences, the delegates of France, of Bel- gium, of Italy, and of Switzerland, seeing a population of seventy million souls thenceforth endowed with the same monetary system, must quite naturally have been led to fix attention on an interest more general, . . . the establish- ment of a general monetary circulation among all civilized states. The government of the Emperor would be very happy to see this proposition well received, but, at the same time, can- not dissemble the difficulties and objections it may encounter. But it doubts not, at least, that the views which are thus in- spired correspond with necessities which henceforth must press upon the solicitude of governments." He expressed the hope that, if the United States found objections too serious to permit them to adhere to the quadri- partite agreement of 1865, the French government might be in- formed of their nature, so that the Latin Union might under- stand the situation, and, if possible, devise means of removing them. The question of the standard of value is not mentioned in the minister's note, nor the decimal system, except indirectly as a feature of the French system. Secretary Seward replied, February 13, that, having consulted the Secretary of the Treas- ury (Hugh McCulloch) upon the subject, he had the honor to state that the United States government, both in its execu- tive and legislative departments, had repeatedly manifested its interest in the question of international unification of mone- 40 THE CONFERENCE OF 1867 tary standards; that the importance of a standard unit of equal value in all commercial countries for the uses of account and currency was fully recognized and appreciated, and that the ideal object presented by France being acceptable, it only remained to be decided how the desired result might be brought about. He hoped that neither the quadripartite convention of 1865 nor the proceedings already adopted under its provisions would be held to preclude any of those governments from en- tering into considerations in favor of its modification, which might be offered by other governments in the interests of a system universally acceptable. In thus intimating that the French government should not hold too tenaciously to its own system, possibly Seward suspected the nature of the ambition of the Emperor, whose efforts were meanwhile prospering. The States of the Church had already acceded to the union in 1866, and Greece and Roumania joined early in 1867, or at about the time of his first overtures to this government. His proposition seemed to be generally received with favor, the moment being oppor- tune. But Prussia manifested some shyness. Bismarck, who had elaborate plans for the unification of the German states well in hand, as a result of the victory over Austria, was not sure of what he wanted in monetary matters, and was perhaps a little suspicious of JSTapoleon. In response to the latter's diplomatic invitation to join the Latin Union, Bismarck, on February 2, 1867, caused a note to be sent to the Prussian minister at Paris, stating that the confederation of Northern Germany was entering upon " a political programme which may include its local monetary systems," and that the Chancel- lor might choose to await the completion of the programme before entering upon the subject of international unification. Xapoleon was to play a much more important part in that pro- gramme than he could have imagined then. Sedan was to figure in its " completion." RUGGLES CONFERS WITH PARIEU 41 On arriving at Paris in March, Commissioner Ruggles 1 was appointed by the Imperial Commission to the interna- tional committee, already referred to, but before it had taken up the discussion of unifonn coinage Michel Chevalier, a member of it, introduced him to Parieu, who was in charge of Napoleon's monetary programme, and with whom he discussed the possibility of the adhesion of the United States to the Latin Union. Ruggles maintained the same position that he held at Berlin four years before, and said that the United States might be able to adhere if the union would coin a 25-franc piece. Parieu could not see the necessity of it if the dollar were made equivalent to 5 francs; for the gold eagle would then have an equivalent in the 50-franc piece. The greatest objection that the French government seemed to have to the 25-franc piece was that it might compete with and, to some extent, drive out of circulation the " Napoleon," or 20-franc piece. However, Parieu said that if it seemed to the United States essential that such a coin should be made, the Latin L T nion treaty might be modified, probably. The aim of the French government at this time, no more* accessions to the union appearing immediately possible, was to test the opinion i Some usually fair bimetallic writers have endeavored to re- flect on the ability of Ruggles, and belittle his official position. The late Francis A. Walker says in his "International Bimetallism": "Mr. Ruggles did not even go to Paris for that purpose. He was already there as the United States Commissioner to the Exposition; and, to save the expense of sending a delegate to the conference, was em- powered to act in that capacity." This is incorrect, as the letters of Secretary Seward to Ruggles plainly show. In his letter to Com- missioner Beckwith in October. 186(i, informing him of the appoint- ment of Ruggles, Seward said: "Mr. Ruggles represented the United States at the late Statistical Congress at Berlin, and has already been in correspondence with the international committee or- ganized upon that occasion upon this important subject (interna- tional coinage), to which he has devoted much study." Later, in notifying the French government of the appointment of Ruggles to the conference, Seward said that he was " familiar with the views of this government." Ruggles's prejudice for gold was no stronger than the government's, or than that of any one in the country at that time. 42 THE CONFERENCE OP 1867 in the various countries through the medium of members of the international committee, and of the commissioners to the fair, as to making coinage equations with the union in order to pre- pare as definite a programme as possible for the conference. As a result of his conversation with Parieu, on the 17th of May Ruggles wrote a note to Senator Sherman, who was at Paris visiting the fair, inquiring whether Congress would probably consent to make the gold dollar conform in value to the gold five-franc piece. On account of the nature of the senator's reply and of the circumstances, some injudicious sil- ver advocates in this country have endeavored to cast suspicion upon him, and to connect in some way his presence in Paris with a conspiracy to force the gold standard on the nations of Europe. Those who have made this charge, and were in public life at that time, were in entire accord with Sherman in so far as they held any opinion at all on the subject. Sherman's reply so well represents the position of the administration and of the leaders at Washington at that time that it is here given in full: " HOTEL JARDIN DES TUILERIES. " May 18, 1867. " My dear Sir: Your note of yesterday, inquiring whether Con- gress would probably, in future coinage, make our gold coins con- form in value to the gold 5-franc piece, has been received. " There has been so little discussion in Congress upon the subject that I cannot base my opinion upon anything said or done there. The subject has. however, excited the attention of several important commercial bodies in the United States, and the time is now so fa- vorable that I feel quite sure that Congress will adopt any practical measure that will secure to the commercial world a uniform standard of value and exchange. The only question will be how this can be accomplished. " The treaty of December 23, 1805, between France, Italy, Bel- gium, and Switzerland, and the probable acquiescence in that treaty by Prussia, has laid the foundation for such a standard. If Great. Britain will reduce the value of her sovereign twopence, and the United States will reduce the value of her dollar something over three cents, we then have a coinage in the franc, dollar, and sovereign easily computed, and which will readily pass in all countries: the dol- lar as five francs, and the sovereign as 25 francs. This will put an end to the loss and intricacies of exchange and discount. " Our gold dollar is certainly as good a unit of value as the franc, and so the English think of their pound sterling. These coins are SHERMAN'S LETTER TO RUGGLES 43 now exchangeable only at considerable loss, and this exchange is a profit only to brokers and bankers. Surely, each commercial nation should be willing to yield a little to secure a gold coin of equal value, weight, and diameter from whatever mint it may have been issued. As the gold 5-franc piece is now in use by over 00,000,000 of people of several different nationalities, and is of convenient form and size, it may well be adopted by other nations as the common standard of value, leaving to each nation to regulate the divisions of this unit in silver coins or tokens. If this is done France will surely abandon the impossible effort of making two standards of value. Gold coins will answer all the purposes of European commerce. A common gold standard will regulate silver coinage, of which the United States will furnish the greater part, especially for the Chinese trade. " I have thought a good deal of how the object you propose may be most readily accomplished. It is clear that the United States cannot become a party to the treaty referred to. They could not agree upon the silver standard, nor could we limit the amount of our coinage as proposed by the treaty. The United States is so large in extent, is so sparsely populated, and the price of labor is so much higher than in Europe, that we require more currency per capita. We now produce the larger part of the gold and silver of the world and cannot limit our coinage except by the wants of our people and the demands of commerce. "Congress alone can change the value of our coin. I see no object in negotiating with other powers on the subject. As coin is not now in general circulation with us, we can readily fix by law the size, weight, and measure of future issues. It is not worth while to negotiate about that which we can do without negotiation, and we do not wish to limit ourselves by treaty restrictions. " In England many persons of influence and different Chambers of Commerce are earnestly in favor of the proposed change in their coinage. The change is so slight with them that an enlightened self-interest will soon induce them to make it. especially if we make the greater change in our coinage. We will have some difficulty in adjusting existing contracts w r ith the new dollar; but as con- tracts are now based upon the fluctuating value of paper money, even the reduced dollar in coin will be of more purchasable value than our currency. " We can easily adjust the reduction with the public creditors in the payment or conversion of their securities, while private creditors might be authorized to recover upon the old standard. All these are matters of detail, to which I hope the commission will direct their attention. "And now, my dear sir, allow me to say in conclusion that I heart- ily sympathize with you and others in your efforts to secure the adop- tion of the metrical system of weights and measures. The ten- dency of the age is to break down all needless restrictions upon social and commercial intercourse. Nations are now as much akin to each other as provinces were of old. Prejudices disappear by contact. People of different nations learn to respect each other as they find that their differences are the effect of social and local custom, not founded \ipon good reasons. " I trust that the industrial commission will enable the world to compute the value of all productions by the same standard, to meas- 44 THE CONFERENCE OF 1867 ure by the same yard or meter and weigh by the same scales. Such a result would be of greater value than the usual employments of diplomatists and statesmen. " I am very truly yours, "JOHN SHERMAN." The terms of this letter, which were communicated to Sec- retary Seward, were entirely approved by him in a note to Ruggles, as adequately and accurately representing the views of 'the administration. Ruggles showed the letter to Parieu, who introduced him to the Minister of Foreign Affairs, and the latter quickly secured for him an interview with the Em- peror at the Tuileries. Ruggles afterwards gave Secretary Seward an account of this interview, from which it appears that Napoleon secured all the information he could as to what the United States might do and what Ruggles thought France could do. He showed the Sherman letter to the Emperor, and said it was as good a statement of the opinion of Congress as could be secured. He also presented it to the international committee, and it unquestionably had influence on the course of events, but only a cumulative influence in developing a plan which soon became the plan of the conference. In a letter to Seward several weeks later Ruggles said : " It is but due to the history of unification of money to state that the earnest and active agitation of this subject in a practical form on the part of the United States exerted its full share of in- fluence in leading the government of France to adopt the de- cisive measure of inviting in diplomatic form an authoritative conference of delegates, duly accredited from all the nations of the European and American world practically accessible, to meet at Paris on the 17th of June, not merely for an ex- change of views or a discussion of general principles, but practically to seek for the basis of ulterior negotiations be- tween the nations." So general was the sentiment for uniform coinage, so shrewdly had Xapoleon directed the favorable current of NAPOLEON'S INVITATION TO THE UNITED STATES 45 events, and so easily did various opinions conform to his pro- gramme, that the enthusiastic representatives of other nations overlooked his influence and his purposes, and actually thought that they were themselves the mainspring of the movement. The United States Commissioner may, under the circum- stances, be pardoned for seeking to give to his government more credit than it actually deserved for bringing about the conference, the prospects of which seemed so bright. Baron de Hock, of Austria, another enthusiastic advocate of uniform coinage and member of the international committee, had a similar opinion of the part Austria was playing. Even had it been for a long time Napoleon's intention to call a conference when he had secured all the additions possible to the Latin Union, the United States and Austria deserve whatever credit should be accorded them for being, for reasons of their own, distinctly favorable to the Emperor's ambitious project, which, had it been carried out, would unquestionably have been of the greatest benefit to mankind, not so much in providing a uniform coinage as in demonstrating quickly and clearly that the simultaneous adoption of an exclusive gold standard by all Christendom was at that time a practical impossibility. Early in May France sent out through the diplomatic channels the formal invitations to the conference. Minister Berthemy assured Secretary Seward that the commissioners would assemble " without any programme arranged in antici- pation," a form of expression frequently used by those who have been quietly making the most elaborate preparations. The jester's definition of diplomacy as the art of skillful lying did not lose its appropriateness with the lapse of the eighteenth century. " The conference proposed," wrote Berthemy, " has not otherwise any immediate object than to call out an inter- change of views and discussion of principles; in a word, to seek for the basis of ulterior negotiations." His government, he said, desired to be informed of the names of the accredited 46 THE CONFERENCE OF 1867 delegates as soon as possible, the time set for the conference being not far off. It is obvious that the calling of a conference to meet in four weeks would naturally have the tendency, if it had not the object, of securing as delegates to it a large num- ber of the representatives of the governments already at Paris as members of the international committee, which, under the guidance of the Imperial Commission, had the subject of uni- form coinage, according to French ideas, well in hand. Sec- retary Seward acknowledged the note on May 29, and informed Berthemy that Ruggles, who was " familiar with the views of this government," had been specially authorized to represent it to the extent and in the spirit of the invitation. The international committee meanwhile continued its work and conveniently completed its labors on the very day that the conference met by adopting the following propositions as a means for securing international uniformity in coinage : " 1. An identical unity in the issue of gold coins by different nations. " 2. The desirability of having such coins uniformly nine-tenths fine. " 3. The desirability of having for each government pieces of equal value with pieces in other states. " 4. Recommending the coins of the Latin Union as the basis of a general monetary system. " 5. Recommending the five-franc piece as a unit. " 6. Uniform coins of each country to be legal tender in all the other countries. " 7. The desirability of abolishing the double standard where it exists. " 8. The desirability of using the decimal system everywhere. " 9. The desirability of agreeing upon common measures of control." Such was the programme laid down by the international committee for the formal conference, some of the leading mem- bers of which were members of the international committee. It becomes clear enough, when events are thus arranged in their proper order, that the adoption of the principle of the gold standard and the extensive demonetization of silver which occurred a little later was not due to hidden conspiracies or THE CONFERENCE ASSEMBLES 47 surreptitious efforts of the moneyed classes, but was an eco- nomic movement, open and above board, except in so far as .N a- poleon was using it for his own ambition. Bimetallic France, eulogized so much for its devotion to the double standard, was mainly instrumental in hastening the consummation of the movement, which was principally due to the abundance of gold and the difficulty of keeping appreciated silver in concurrent circulation. It was an agitation which conspicuously bore the stamp of the approved school of political economy. Kapolcon could not have been otherwise than grati- fied at the response of the nations as indicated by the charac- ter and standing of the delegates who assembled on the morn- ing of the 17th at the hotel of the Department of Foreign Af- fairs. There have been many congresses of a politico-diplo- matic nature attended by the most eminent statesmen of the times, but there has seldom been an international conference made up of so many men of the highest standing in science and economics. In point of recognized ability no monetary con- ference has surpassed it. Great Britain sent Thomas Graham, the celebrated chemist, who, since 1855, had been Director of the Royal Mint, had published many valuable and standard works on chemistry, and was a fellow of the Royal So- ciety. From Bavaria came Friedrich Wilhelm von Hermann, one of the most distinguished economists of his day. His great work, " Staatswirthschaftliche Untersuchen " (" Economic Researches "), appeared in 1832, and three years later he was made a member of the Royal Bavarian Academy of Science. From that time until his death, a few weeks after the confer- ence, his life was a succession of active and energetic services in economic lines. In 1839 he assumed charge of the Bavarian Bureau of Statistics, which acquired a wide reputation; in 1848 he sat as member for Munich in the national assembly at Frankfort, where he w r as instrumental in organizing the so- called " Great German party," whose views he also represented 48 THE CONFERENCE OF 1867 at Vienna. In the course of his busy life he published many reviews and papers, and as the head of the Bureau of Statistics published a yearly report of high value. The little state of Switzerland was represented by three of its ablest and most distinguished men, Dr. J. Conrad Kern, Dr. Alfred Escher. and Charles Feer-Herzog. Dr. Kern, who was then Minister to France, early in life became prominent in Swiss affairs, and distinguished for his legal and administrative ability. When, in 1838, the French government demanded the extradition of Louis Napoleon, then living in exile in Switzerland, Dr. Kern took the most prominent part at the Diet in stirring up the Swiss to refuse to be intimidated, and war was averted only by Napoleon voluntarily going to England. In 1848, Kern took a leading part in the preparation of the federal constitution, and on many notable occasions in Europe he was the repre- sentative of his country. In the regeneration period of Swit- zerland which marked the beginning of a new era in the his- tory of the country, no statesman had taken a more conspicu- ous part than Dr. Escher. In later life his energies were chiefly devoted to educational plans, the reorganization of church pol- icy, and the promotion of banking institutions and railway en- terprises, the notable manner in which engineering difficulties in the Swiss mountains have been met, as in the St. Gothard line, with its fifty tunnels, being a monument to his energy. In 1849 he became President of the National Council, and at the time of the conference was Director of the Mint. Charles Feer-Herzog, a member of the National Council, had been ac- tive in the formation of the Latin Union, and was destined to have an influential part in this and a subsequent conference. He had studied and written much upon monetary subjects, and was already considered a leading advocate of the gold standard. From Russia came Moritz Jacobi, a celebrated scientist, a Privy Councillor, and a member of the Imperial Academy of Sciences at St. Petersburg. From Greece, Theodor Delyan- THE GOVERNMENTS AND THEIR REPRESENTATIVES 49 nis, a man of forty, just beginning his notable career as Minis- ter to France. The accomplishments and earnest services of Samuel B. Ruggles, the American delegate, have already been referred to. He was a native of Connecticut, a graduate of Yale, and for many years had been a leading member of the New York bar, having made commercial matters an especial study. Austria was represented by Baron de Hock, Privy Coun- cillor, and a member of the House of Lords; Baden, by Baron Schweizer, Minister to France, and Dietz, Privy Councillor and Commissioner-General to the Exposition ; Bavaria, in addi- tion to Hermann, already mentioned, by Haindl, Director of the Mint ; Belgium, by Senator Fortampe, Director of the Bank of Belgium, and by Stas, Commissioner of Coinage and mem- ber of the Royal Academy; Great Britain, in addition to Thomas Graham, by Rivers Wilson of the Treasury Depart- ment, and better known later as the Minister of Finance, chosen by the Khedive of Egypt in 1879, when England was seeking protection for the Suez bonds; Italy, by Isaac Artom, Councillor of the Italian legation at Paris, and by F. Giordono. Inspector of the Royal Corps of Mines and Commissioner to the Exposition; Denmark, by Count Hvitfeldt, Minister to France; the Netherlands, by A. Vrolik, formerly Minister of Finance, and the author of a work on " The Demonetization of Gold," which had attracted considerable attention, and by President Mees of the Bank of the Netherlands; Portugal, by Count d'Avila, Minister to Spain and Commissioner to the Ex- position, and by Viscount de Villa Major; Prussia, by Mein- ecke, Superior Privy Councillor of Finance, and Herzog, Councillor of the Department of Commerce and Commissioner to the Exposition; Sweden, by Wallenberg, member of the first chamber of the Swedish Diet and a Director of the Bank of Stockholm; Norway, by Dr. O. J. Broch, member of the Storthing and President of the Commission to the Exposition; 50 THE CONFERENCE OF 1867 Spain, by Count Nava de Tajo of the Department of Foreign Affairs; Turkey, by Djemil Pacha, Ambassador to France; Wiirtemberg, by Baron de Soden, Privy Councillor of Lega- tion at Paris. To meet this array of influential men, France had chosen the Marquis de Moustier, Minister of Foreign Affairs; Es- quirou de Parieu, Vice-President of the Council of State; Lavenay, President of the Section of Finance in the Council of State; Ilerbet, Director in the Department of Foreign Af- fairs; and Dutilleul, Director in the Department of Finance. The invitations to the conference had announced that the Marquis de Moustier and Rouher, the Minister of Finance, would preside jointly over the assembly, the vice-presidency devolving upon Parieu, so that the conference was officered by Napoleon without putting it to the trouble of choosing for itself. The usual courtesy prevailing in such bodies would doubtless have resulted in the choice of one of the French dele- gates to the presidency, though the same courtesy might have given the vice-presidency to some other country. The Mar- quis de Moustier was present at the opening of the conference, but its direction was immediately left to Parieu, who had probably made a more extended study of the subject of inter- national coinage than any delegate there, had been Napoleon's chief agent in effecting the Latin Union, and in getting the international programme into shape, and who, in the chair, seconded by his associates on the floor, was entirely competent, as well as determined, to promote the interests of France and the desires of Napoleon. He was a member of the Institute, and, as a prolific contributor to the French reviews on mone- tary subjects, had gained a wide reputation. It will appear that the Latin Union, considering the lead- ing part taken by delegates from the countries composing it, was ably represented. The French and Swiss delegates to- gether were quite sufficient to meet any criticism