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• Translator's Preface
• Section I.: Preliminary Observations.
• Chapter I.: The Question Stated
• Chapter II.: Preliminary Observations On the Rise of Prices Which Has Characterised the Last Few Years.
• Section II.: An Appeal to Some of the Fundamental Notions Upon the Nature and Characteristics of Money.
• Chapter I.: What We Ought to Understand By Value and Price.—twofold Definition of Money.—the Standard Or Fineness of Money.
• Chapter II.: Of the Meaning of the Word Standard.— the Metal-standard Is That From Which Is Derived the Monetary Unit.—the Two Ideas Standard and Monetary Unit Imply Each the Other.
• Chapter III.: Of the Character of Exchanges As Affected By the Invention of Money —how the Rise and Fall of the Precious Metals Are Manifested In the Course of Trade.—phenomena of the Rise and Fall In Commodities.
• Chapter IV.: On the Possibility of Conferring the Quality of Standard Upon Two Metals At Once.
• Chapter V: Of the Meaning of Certain Words Specially Applicable to Money and the Precious Metals.—price, Value, Premium, Dearness, Cheapness
• Section III.: Of the Present Production of Gold and Its Outlet.
• Chapter I.: Of the Increase In the Present Production of Gold As Compared With the Past —the Extended Coinage of Gold Which Has Followed.
• Chapter II.: Diminished Coinage of Silver In France—gold Is Already At a Discount In Comparison With Silver.
• Chapter III.: Extraordinary Exportation of Silver From the Civilised Countries of the Western World Towards India and China —to What Extent It Is Likely to Continue.
• Chapter IV.: France Serves Temporarily As a Parachute to Retard the Fall of Gold.
• Chapter V.: Whether the Extraordinary Production of Gold Ought to Be Considered As an Ephemeral Accident.—the Crushing of the Quartz Veins —mines In Siberia and Elsewhere.
• Section IV.: On the New Outlet That May Be Expected For the Production of the New Gold Mines, and Whether It Will Be In Proportion to the Extent of This Production.
• Chapter I.: Of the Outlet Afforded By Those Countries Which At Present Have Evidently an Insufficient Proportion of Metal In Their Currencies.
• Chapter II.: Of the Increase of Gold Money Which May Arise From the Development of Business, and the Increase of Population.—of Wear and Tear.—of Hoarding.—of Shipwrecks.
• Chapter III.: On the Employment Which Habits of Luxury May Offer to the Gold of the New Mines.
• Chapter IV.: Conclusion of the Preceding Chapters.—the Fall of Gold Very Probable, If Not Inevitable, In Relation to All Other Commodities.
• Section V.
• Chapters I. to V.: On the Part Assigned to Gold In the Monetary Legislation of France.
• Section VI.: Consequences of the Fall In the Value of Gold.
• Chapter I.: A General Distinction Between Those Private Incomes Which Will, and Those Which Will Not Be Affected. of a Certain Collective Loss Which the People of France Will Suffer.
• Chapter II.: Of the Sufferings and Difficulties Which Will Accompany the Transition.
• Chapter III.: On the Gain Which Would Result to Certain Classes of Persons, and to Society, From the Fall In Gold. the Saving to the State From the Payment of the Dividends On the Public Debt.
• Section VII.: Of the Measures to Be Taken to Avert the Evil Effects of the Fall of Gold.
• Chapter I.: Case of a State Like England, Where Gold Is the Standard, and Where There Is No Other Money But Gold.
• Chapter II.: Case of a State Such As France, Where There Is a Silver Standard, But Also a Gold Currency.
• Chapter III.: The Measure Here Recommended Is a Necessary Complement of the Law of Germinal, Year XI.
• Chapter IV.: On Some Inconveniences Inherent In the Combination, Respecting a Gold Currency, Recommended In This Work.
• Chapter V.: Of a Plan Recommended For Maintaining the Parallel Circulation of Silver and Gold.
• Chapter VI.: Of the Resolutions of a Commission Appointed By the Minister of Finance In Mdccclvii.
• Chapter VII.: Of Various Acts Which the Legislation of the Ancient Regime Upon Money Treated As Crimes, and With Regard to Which Some Persons of Our Day Propose to Establish Penalties. —selecting, and Melting; Trade In Coins; Exportation.
• Chapter VIII.: Of a Different Solution Which Has Been Recommended, and Which Would Consist In the Adoption of a Gold Standard.
• Chapter IX.: Appreciation of the System Which Consists In Adjourning Indefinitely the Legislative Solution.

SECTION VII.

of the measures to be taken to avert the evil effects of the fall of gold.

CHAPTER I.

case of a state like england, where gold is the standard, and where there is no other money but gold.

Such, then, is the perspective which presents itself to the inhabitants of a certain number of States, and particularly of France and England. Simultaneously with the fall of gold, there will be a period of great suffering for a very large number of interests worthy of consideration and sympathy, a period full of danger to the tranquillity even of States, and to the regular progress of society. In England, an inflexible law seems to warrant these hardships and sufferings. In France, which is threatened with the same danger, we find a legislation which was matured half a century ago, an intelligent, honest legislation, in the name of which the aggrieved interests might loudly protest, and declare that in them a sacred right had been denied and violated. In these circumstances what ought to be done?

In the countries where gold is the monetary standard, as in England, it is not easy to indicate what should be done; it may even he contended that there is no ground for doing anything. Yet, even in England, some persons have put forth the advice that the standard should be altered, and that silver should be substituted for gold. They ground their opinion primarily upon the plea of principle, in maintaining that gold having ceased for an interval of time, which may possibly be rather long, to satisfy the essential condition of having a value relatively stable, it thereby loses its aptitude for the functions of money.

A change in the standard is a serious act, to which we have no right to resort till after the gravest deliberation, and until we are well assured that we have reason and justice on our side, as well as the highest and most legitimate public interests. Still, the substitution of one precious metal for another, for the important attribute of a standard, would be far more easy to justify in the case of abandoning the metal which was threatened with or had already experienced a gradual fall, than if it were proposed, as has been done by some persons in France, to divest of the quality of the standard a metal which preserves a relatively stable value, to bestow it upon another, the value of which is undergoing a fall. Still, a change of standard, even under the circumstances in which gold would be replaced by silver, in England, at the present time, would be open to very serious objections. Debtors of every kind, to whom this substitution would necessarily be prejudicial, would say, not without justice, that if it be true that in the present state of the law, as regards the standard, a fall in the value of gold must turn to their advantage, it is equally true that a rise, if it had taken place, would have been to their detriment, and to the benefit of their creditors: if fate has decided in their favour, it is for their creditors to submit, as they should them-selves have done in the opposite event: and, they might add, have not there been periods in the modern history of England when the debtor has had to suffer from the rise in gold, either by comparison with its past value, or by comparison with the paper money which he, the debtor, had received when he borrowed in the period from 1797 to 1821, and which he has since the latter date had to repay in gold? and has not this been attended with precisely the same result as if the theory of a rise in the precious metals had been realised? If, in these circumstances, they had demanded a change in the monetary system of the country, they would certainly not have been successful. By the same reason, may they say, there would be no ground now for entertaining the remonstrances which the creditor might offer on the occasion of a depreciation in gold.

An argument which, in the eyes of the public authorities of England, will weigh with great force, and incline the balance towards the maintenance of the present standard, is furnished by the enormous amount of the public debt, the annual interest of which amounts to about 28 millions sterling, or 700 millions of francs. It is a burden which, whilst it remained nominally the same, would, in fact, be alleviated to the extent of one half to the taxpayer, provided that the present standard were preserved whilst the value of gold had fallen in the above proportion; and, in effect, when once the fall in the metal was accomplished, it would be as easy, on this assumption, to pay two pounds sterling of taxes as one pound at the present time. A less decided reduction of the heavy burden of the national debt, would, in all probability, be a powerful argument with such an assembly as the parliament, which leans naturally in the direction where relief may be had for the contributors to the revenue, and which in the present case would have powerful reasons for justifying such a course.

With regard, however, to this advantage, which it would be warranted in strict right to claim for the taxpayer, parliament ought to weigh the mass of inconveniences, and even of perils, which must necessarily result from the maintenance of a currency in a decided course of depreciation. I have indicated what are the changes which a fall in the metal, of which money is made, might occasion to a multitude of interests. It ought, I think, to be enough to kindle the emotions of even a statesman possessed of the firmness which distinguishes peculiarly the governments and people of England. But yet, it would be easy to add to the generalities which I have already presented, other facts springing from the social life and habits of England. The part performed by the British funds is very extended. Consols are the investment of a mass of capitals which are worthy of the particular solicitude of the legislator. The funds, which are held by trustees, or under the guardianship of the Court of Chancery, and which constitute the fortune of a multitude of minors, are all placed in the public funds, or on mortgage, which amounts to the same thing; I mean, runs the same risk. The endowments of a multitude of churches, schools, hospitals, and valuable institutions of all kinds, are also invested in the public funds. In a great number of cases, the fortunes which a father leaves to his younger children are represented by sums of money charged upon his estate, the interest of which the oldest son discharges. The number of persons who live upon life-incomes, or who have already made payments with a view of some day securing one, is very considerable in England. Life assurance, with a view of securing to a person a certain income in case of such or such an eventuality, is practised by the English to an extent of which we have no idea in France. The consequence is, however, clear. Under these various forms, and even under others, myriads of existences would be troubled; the very foundation of property would be assailed in the mode of its partition among children; habits worthy of encouragement, such as assurances of lives, with their multiplied combinations, would be destroyed. The custom of making investments in the public funds, which is eminently favourable to the credit of the State, and at the same time tends to perpetuate prudence among the people, would be deprived, during a considerable lapse of time, of the advantage which it now offers of guaranteeing for the future a certain degree of comfort,—thus necessarily weakening, if it did not destroy, this motive to accumulate. Taking into account the whole of these circumstances, and the discouragement which would be thrown upon habits which are so favourable to society, and even to the British treasury, there is enough to make parliament pause even when in presence of the temptation which an effective reduction of the public debt could not fail to exercise.*

CHAPTER II.

case of a state such as france, where there is a silver standard, but also a gold currency.

In States, like France, where the law acknowledges only a silver standard, and where of right gold fills in the monetary system but a subordinate rank, the remedy of the evil is, in a great measure at least, less difficult to discover, and the legislators, in coming to a decision, would have fewer perplexities to surmount than in the case of England. It would suffice if we were to put an end to the toleration, contrary evidently to the spirit of our laws upon the matter, in virtue of which gold will continue indefinitely, unless provided against, to take its place in the circulation on the same conditions as if it always preserved, in comparison with silver, the same value that it had done half a century ago.

In the system of French legislation, if gold instead of being worth, as in the year 11, 15½ times its weight in silver, were only worth the half, that is, 7¾ times, it would be necessary to take such measures with regard to the currency, that that which should be a franc in gold, that is to say, the legal equivalent of the piece of 5 grammes of silver, of nine-tenths fineness, should comprise 58 centigrammes of the precious metal Such is the spirit and even the text of the law. It would be necessary to subject the gold coinage to an analogous change, should gold, instead of falling one-half, only fall to ten times the value of silver, or to twelve, or fourteen, or even to fifteen times. Now, by what mode is this transformation to be arrived at? Would it be by recoining the pieces of 10, 20, or 40 francs, so as to just double the fine metal which they contain, on the hypothesis of a fall of one-half?

So understood, the process of recoining would encounter, in its execution, a difficulty which appears to me insurmountable: to have always coins of a fixed value, of 20 francs for instance, it would be necessary to repeat, indefinitely, the process of melting; it would have to be resorted to whenever gold declined 3 or 4 per cent, in comparison with silver, or, more properly speaking, at even shorter intervals.* Gold coins would have hardly left the scales before it would be necessary to return them there again. Such a fluctuation in the intrinsic value of a gold coinage is repugnant to common sense, and is absolutely inadmissible. Such a process of remelting may have been tolerated when a slight variation in the value of gold was foreseen, and also on the supposition—not a very probable one—that the period of the disturbance would only last, so to say, for a moment, and be followed immediately by an almost mathematical stability. From the moment that there is a prospect of a considerable variation, which, from its very magnitude, cannot be completed until after a considerable lapse of time, and which seems likely to be attended with many fluctuations, this expedient becomes impracticable, nay, let me say, chimerical.

It would be better to recoin the gold once for all, and adapt it to another system, by giving the coins a fixed weight, in relation, simply, with the base of the metrical system, instead of always trying to bring them, by alterations of weight, to a fixed value, such as 40 francs, 20 francs, or 10 francs. Pieces of gold might be coined of 5 grammes or of 10 grammes, like the piece of one franc in silver, which weighs just 5 grammes, and the piece of two francs, which weighs ten. It would be to revert to the plan which was recommended by Mirabeau, by the old authorities of the mint, by the Institute as a body, which was adopted by the legislature in the year 3, and to which, in the year 6, it gave a renewed proof of its adhesion.* It is, also, the idea which was recommended by the section of finance in the Council of State during the discussions of the year 11. The value of these pieces, that is to say, the number of francs and fractions of francs which they would be worth, would vary according to the market value of gold in comparison with silver. To save individuals from the annoyance of bargaining over each payment, this value might be fixed every six or twelve months, by an official regulation which should give, for the basis of the value of the gold coinage, the market value of this metal, in comparison with gold on the principal exchanges of Europe, such as London, Paris, Hamburg, or even the average of the exchange between these different States having different metals for their standards. This would be to adopt the first idea of Prieur, and the Committee of the Five Hundred, perfected by Crétet and the Committee of the Ancients.

Nevertheless, it is a question for consideration, whether the payments from individual to individual, to which this legal quotation of gold applies, should not be limited to a certain maximum, such as, for instance, the sum of 1,000 francs (£40), and whether for larger sums the transactions of individuals ought not to be left to the contract of the parties.

The arrangement which I have just indicated, I mean the recoining of the gold currency into new pieces, containing a round number of grammes, is of all plans the most philosophical, and the most in conformity with the best established views respecting the currency: habit would soon easily accommodate itself to it, and it is that which gives to the future the surest guarantees against such monetary derangements as we are now undergoing. The only fault to be alleged against it, is the necessity not only for a general but an immediate recoinage. With a little reflection, however, it will be found that the inconvenience is not serious, for it will be very easy, and at little expense, to melt and recoin one or two milliards (£40,-000,000 or £80,000,000), and the circulation of France restored to its normal state, will not require two milliards of gold, alongside of the silver money and bank notes.*

Another and more simple expedient might be adopted, provisionally, until the new coinage was determined upon, and which would change the state of things instantly and without expense. A law might be passed declaring that henceforth the piece of 20 francs shall only be worth 19, or 19 francs, 50 centimes; afterwards, when the fall of metal shall have been more decided, a new law might pronounce it to be worth 18 francs, 50 centimes, or 18 francs, and so on. This is what was done in Russia, where the edict of 1810, which offers a great analogy to the French law of Germinal, year 11, had ordered the fabrication of imperials and half imperials, in gold, of 10 and 5 roubles, the rouble being a silver coin serving for the monetary unit. In consequence, many pieces of gold of 5 roubles have been struck, bearing the inscription in letters, of five roubles, as our Napoleons bear that of twenty francs. The edict of the 1st (13) July, 1839, which is the complement of that of 1810, finding the relation of the metals a little altered, gold having risen in value in Russia and throughout the world, enacted that henceforth the half imperials, called pieces of 5 roubles, should pass for 5 roubles and 15 copeks, which was found to work very well, notwithstanding the name of five roubles inscribed on these coins. I do not see why the same process should not be resorted to in France, and in the countries where the monetary legislation is the same; only in an inverse way to that which was practised in 1839; for gold having now fallen in value instead of rising, it should not be by an addition being made to the value of the gold coins, but by subjecting them to a deduction, and this deduction might be more decided at a later period, when occasion arose,—which would be seen by a comparison of the market value of the two metals.

In the same way in Spain, where a succession of edicts changed the relations between the quadruple of gold, and the silver dollar, in conformity with the variations which these two metals had undergone in their respective values. One of these edicts is dated July 17, 1779. There is, however, this difference, that in Spain the quadruple did not bear an inscription declaring it to be equivalent to such or such a number of dollars, the same as under the ancient regime; in France the gold coins, the louis and the double-louis, did not bear an inscription which said that they were worth 24 and 48 livres. The law assigned to them this value in relation to silver coins, which were either the livre or the multiples of the livre; but the law could be modified in this respect without leaving the inscription on the gold coins in contradiction with the new value which had been given them.

In a State where the currency is regulated by laws such as those which subsist in France, this inscription of the words forty francs, twenty francs, or ten francs, on the gold coins, or any similar inscription which might be used in another country, where, moreover, the law should have laid down the principle of a silver standard, is not of a nature to prevent the legislator from assigning to the existing gold coins a successively diminished value, and conformably at each instant to the relation between the value of gold and that of silver.

So far as I understand the monetary legislation of the Empire of Russia, the government of the Czar was perfectly warranted in altering the value of the gold imperial in roubles, in the manner I have just indicated. In the same way with France, in virtue of her monetary constitution, the government would be doing nothing which was not in conformity with reason and justice in modifying the value in francs of her gold coins, of, say, 10, 20, and 40 francs, conformably with the variations in the value of gold in relation to silver, which is the metal of her monetary unit. What is, in fact, the meaning of the words ten francs, twenty francs, or forty francs stamped upon our pieces of gold? Do they mean that these coins shall be necessarily, and forever taken for the sum of 10, or of 20, or of 40 francs? Assuredly not, for this interpretation would be contrary to the spirit and letter of the law. It would, in fact, be to say, that gold, as well as silver, is the standard. The quality of standard implies immutability of value; it reveals itself only by this immutability, and the immutability in its turn implies the quality of standard. The words inscribed on the gold coins struck since 7th Germinal, year 11, have only a restricted and provisional meaning,—they express a material fact, namely, that at the moment when these pieces have been coined, the relation between the two metals was such that the weight of gold contained in the coins called 10, 20, or 40 francs is the equivalent of 10, 20, or 40 francs, that is to say of 10, 20, and 40 times 5 grammes of silver of nine-tenths fineness, or that, if there is a difference, it is so slight that in small transactions, it is not worth notice. I say small transactions, for under the regime of the law of the 7th Germinal, year 11, gold ceased to figure in operations a little considerable, since it acquired an appreciable premium. People carried their gold to the money-changer, in order to pocket the premium, and, as all the world knows, they made their payments exclusively in silver.

The French legislator intended that where the variation in the value should become sufficiently sensible to destroy the equilibrium between the respective weights in gold and silver, represented by the numbers 1 and 15½, the government should not only have the right, but the duty of effecting a recoinage, with a view to protect the interests towards which the legislator contracted a solemn engagement in the year 11, interests perfectly respectable, and in fact, the interest of society in the mass. This obligation is especially binding in the case, which is now imminent, in which the variation of gold has been in the direction of a fall; for, in the opposite case, that of the rise of this metal, no wrong can possibly arise. In fact, no one could then be wronged, unless it were the debtor who discharged his obligations in gold; but it is evident that the debtors would in such a case pay in silver, nothing but silver. How can it be supposed that a debtor would go in search of the dearer metal, and not make his payments in the cheaper? In fine, what payment of any importance was made in gold coins in the twenty years which preceded the discovery of the mines of California and Australia?

Now, if the legislator has the right and duty to recoin the gold currency, in order that in the piece of 20 francs, to speak only of this particular coin, there shall henceforth be a larger quantity of gold, he has equally the right to effect another operation, in substance identically the same, that of enacting that the piece actually called 20 francs shall only be worth 19¼, or 19½, or 19, and afterwards 18, if such is the value which results from the comparison of the market price of the two metals.

Substantially, in all the systems of recoining, as in the case where we might adopt, provisionally, the plan of leaving the present gold coins to circulate, assigning to them a less value than that inscribed on their reverse, the only embarrassing question is to know who shall bear the loss representing the diminished value of the metal. For every particular coin, in the actual state of things, this loss would be very limited; but bearing in mind the enormous amount of coinage which has taken place, the total loss would amount to a very large sum. Whatever was the expense to which it might be necessary to submit, that would be no sufficient reason why the State should shrink from its responsibility and falsify the natural meaning of the law, if it was really in equity bound to support the loss. However, on this point, it seems to me that there are sufficient reasons for maintaining that the diminution of value would fall legitimately on the private holders of the coins, instead of being made a charge upon the State. What are the grounds in virtue of which the State should be made to bear this sacrifice? The persons who maintain this opinion urge that the State in issuing these pieces, having assigned to them the value of 20 francs, that is to say of a hundred grammes of nine-tenths fineness, has made itself responsible, and that it is bound to redeem them on this footing, if it decides that they shall cease to circulate at their present value. This argument has but one fault, that of wanting a foundation, for the fact on which it rests does not exist. It is not the State which has issued the pieces of gold money any more than the pieces of silver; it is by private individuals that the emission has been made. In France, the part of the State, with regard to the coining of money, reduces itself to a simple surveillance. It certifies, with solemn forms, and the solemnity is here well-placed, that the coins which issue from the scales possess the weight and fineness intended by the law. The directors of the mint undertake to work by contract, according to a tariff which the government has settled for private individuals, who, possessing gold and silver, wish to convert those metals into coins. They do not manufacture on account of the State. Under the ancient regime, when Louis le Bel committed scandalous frauds on the currency, the mints worked on account of the king. It may have always been so whilst the sovereign appropriated to himself, under the name of seignorage, or any other name, an exorbitant profit upon the coinage. On the contrary, it is now a settled principle that the State should gain nothing by the mint, and that the charge to be levied on the gold and silver brought to be coined should be as moderate as possible, so as to represent merely the expenses and interest of capital.* So true is this, that we see in France that, in proportion as the process of coining is perfected, the tariff of charges at the mint diminishes. There are even States where, as in England, the public treasury supports the expenses of coining. Under such circumstances, can there be any ground for saying that in France, the State has guaranteed anything to the public, on the subject of the gold coins, beyond the exactness of the weight and fineness decreed by the law? and if it be settled that the law, both in spirit and letter, decides that the gold coins remain the equivalent of 20 or of 40 francs, in payments, only so long as the respective value of the two precious metals shall continue to be defined by the relation of 1 to 15½, would those individuals who should not take advantage of their pretended ignorance of the law, be warranted in showing their astonishment at learning, some fine day, that the disc of gold which they have in their pocket, which had been previously worth 20 francs, was, henceforth, worth only 19¼; or perhaps 19½?

The argument attempted to be drawn from a pretended ignorance of the law, with a view to relieve the holders of coins from the charge which will fall on them in case of the recoinage of which we are speaking, cannot be received; it is a matter of right, well determined; but here there can be no pretext for invoking it, for the law of the year 11 could not be represented as an improvisation, something dispatched privately, without previous warning. Far from it, this law, finally drawn up with much deliberation, in the silence, it is true, in which the legislative mechanism under the Consulate worked, had been preceded, and announced by a great number of discussions, of projects of laws, of laws even, ever since the year 1789. Under the Constituante, the voice of Mirabeau thundered forth the fundamental conditions of this law, and from this moment to the year 11, during fourteen consecutive years, the most remarkable unanimity of opinion was displayed in favour of the general ideas, which were definitively embodied in the law of the year 11. It was difficult to be more thoroughly warned than was the public in this affair.

To this opinion, that the State would not have to indemnify any one in changing the gold currency, two precedents are opposed, drawn from the practice of two governments distinguished for their intelligence, their integrity, and their knowledge of business. Belgium and Holland have modified their legislation on the subject of their gold currency, and, in this operation, the diminution of value which the gold coins have undergone, in consequence of the fall of the metal, has been placed to the charge of the State. In Belgium, and in Holland, the State, in withdrawing from the gold coins the legal tender, offered to the holders the nominal value at which they had previously passed, in silver. We are asked whether this is not a reason why the State should do the same in France.

The example of Belgium, which had a monetary legislation analogous to that of France, cannot, however, have here much weight. Belgium had no gold coinage until 1847. A law then authorised the fabrication of national gold pieces of 25 francs, and of 10 francs; but the issue was expressly limited by the law to 20 million of francs (£800,000), and it only attained to 14,646,025 francs (£585,841).* This money was only in an experimental state in Belgium when it was thought that it might be proper to deprive it of its legal attribute. The administration received, by the law of 28th December, 1850, powers to this effect, which it might use when it should judge the circumstances opportune. It only availed itself of the law in 1854 (royal edict of the 15th August). At this time the depreciation of gold in comparison with silver was very trivial. In engaging to pay the nominal value of the gold pieces in silver currency, the State incurred no risk of any serious loss. In fact, this restitution has cost it nothing. The National Bank and the Société Générale have supported,—each the moiety,—the moderate loss to which the operation has given rise.-† By this proceeding, the Belgian government contrived to parry beforehand, without in the least compromising its finances, the objections which discussions on such matters will raise in a parliament. I do not pretend that Belgium has done wrong; but it does not seem to me that what she has done should be a precedent to bind France.

In Holland, the question of reimbursement in silver presented greater difficulties, for there had been coined a much larger mass of gold money. The pieces of 5 and 10 florins formed a total of 172,583,995 florins, or 370 millions of francs‡ (£14,800,000). In proportion to the population it is as 5 milliards for France (£200,000,000). Nevertheless, the Dutch government did not hesitate to assume the charge for reimbursement in silver. But, was the legislation of Holland the same as our own? Did not the Dutch law admit of the two standards? If it did, the State was bound in honesty by an engagement, tacit at least, to barter the coins made of one of these metals for a value, nominally equal, in coins of the other, whenever it should decide to modify its monetary system, by demonetising its gold currency. There is nothing in that which is applicable to France.

I have said that the legislation of Holland recognised the two standards. The text of the law of the 28th September, 1816, which was the fundamental monetary act of the Netherlands, warrants a doubt on this point, and it may be said that that law did not solve the question of the double or single standard; the question was never mentioned,—but that was itself sufficient to solve it. If it had been intended that there should be only one standard, which would have been regarded as an innovation upon the old usages which they were reviving, the exposé des motifs would have made it known; but there is nothing said, absolutely, either in that document, or in the preamble at the head of the act: moreover, the Dutch legislator himself, of 1816, the period in question, appears always to have thought that the country was under the regime of the double standard. The text of several laws proves it. We may refer, for example, to the preamble of the law of the 26th November, 1847.

Another difference, worthy of being cited, between the monetary legislation of the Dutch and that of France, consists in this, that in Holland the gold pieces of 5 and and of 10 florins, which are those that the government withdrew from circulation, paying for them in silver, florin for florin, had been issued by itself and on its own responsibility. It had expressly reserved to itself the monopoly of this issue, and it was only just that it should support all the risks.* The part played at the mint by the French government is, as we have seen, very different from this.

Upon the point under discussion, that is as to the party on whom should fall the expense of a recoinage, or the loss on the value of a piece of gold, it may be here remarked that the case had been already foreseen in some of those documents which served for a preparation for the law of 7 Germinal, year 11, particularly in the first report of Gaudin to the consuls. Now, on the course to be taken. Gaudin never hesitates; he says in express terms—” The expense shall be borne by private individuals,” It is a passage in his report which I have repeatedly quoted in the course of this work. Nothing occurred to impair the force of the words of Gaudin in the course of the long preparation which the law underwent; and this, if I mistake not, is an argument of some weight.

It must not be supposed that, in the present state of things the loss would be serious for the bulk of individuals, even of the rich. At this moment the depreciation of gold, in comparison with silver, is very small; and consequently for a sum of 1,000 or 2,000 francs, which is as much as a person in easy circumstances has ordinarily in hand, with very few exceptions, the loss, supposing it to be 1 per cent,† would be 10 or 20 francs; let us double it, and still it is insignificant compared with the fortunes of those persons. Besides, to those who complained, there would be the right to reply that the government imposes no sacrifices on them, that it limits itself to the putting an end to a fiction and a confusion prejudicial to the public interest, and that, if they find themselves injured, it arises out of the nature of things exactly the same as when a fall takes place in wheat, wine, cattle, or cotton goods.

But one word more. Even if we should be of opinion that it is the State which ought to bear the diminution of value which the gold coins have now sustained, that would be no reason for not proceeding with the change. Imperious motives, economical and political, command us to take a decided course. We should prepare for ourselves much future regret, if we were longer to delay. The expense of a recoinage, made even at the cost of the State, is as nothing compared with the losses to which we shall subject ourselves if we do not hasten to act in accordance with sound principles, and to the prescriptions of the law faithfully interpreted. Nevertheless, however small may be the chance one has in France, where he sustains the public interest against the interests of individuals, I cannot refrain from repeating that from the terms of the documents which define the sense of the law, and according to the text, reasonably interpreted, of the law itself, the State is not bound to offer any indemnity to the holders of the gold coins.

If the legislator were now to adopt the conservative measures which have been indicated above, and to which he is led by a fair interpretation of existing legislation, we are warranted in believing that everything would pass without shock, and that the instrument of exchanges would remain in the condition of abundance required for the ordinary extent of our transactions. There is, in feet, still a good deal of silver in the departments. At the height of the extraordinary demand for silver which has, of late years, manifested itself for India and China, but which has slackened in 1858, Belgium and Holland, which have now no legal currency but silver, have experienced no want of metallic money, and this is a double experience which is convincing. Then we must not forget that, with the combination which I have quoted from the proposition of the Council of the Five Hundred, modified by the Committee of the Ancients, gold would not cease to circulate in France in large proportions. There is no visible reason why under this regime, much less absolute than that which has been adopted in Belgium and in Holland, gold should retire from the circulation. Everything, on the contrary, leads to the belief that it would remain to the extent to which we should require it. With respect to the precious metals, that which would be thenceforth interrupted, and it would be so to the great advantage of the public, is the current, so violent for several years, which replaces, in the circulation of France, the silver money by a gold currency, and which, if it be not arrested, will overturn the monetary system which the legislature of France, regenerated by the' Revolution, flattered itself it had firmly established upon immutable foundations.

CHAPTER III.

the measure here recommended is a necessary complement of the law of germinal, year xi.

I beg the reader to observe that the combination which has been discussed in the preceding chapter, relative to a gold currency, ought not to be represented as, in any degree, the negation of the law of the year 11. It is, on the contrary, its complement, the necessity of which has been demonstrated by experience. The object which the minister of finance, Gaudin, had in view, and which the legislator decided resolutely to carry out, was to prevent all dispute between private individuals relative to the value of a gold currency in francs, or, in other words, in pieces of silver, since the law has defined the franc to be a weight of silver agreed upon once for all. The means employed was a legislative fixation, which should be conformable to the commercial value of the two metals, in their relation the one to the other. The adversaries of Gaudin, as may be seen by the reports of Berenger, vainly objected that this fixation by the law appeared superfluous, and cited some States where gold circulated simultaneously with silver without difficulty, without any intervention from the legislative or administrative authority. The majority of the Council of State, and afterwards the Tribunal of the Legislative Body, both of which deliberated very maturely, thought that, to insure the parallel circulation of gold and silver coins, a fixation by law of the relation existing between the two metals was the best course to follow.

It was well known, and Gaudin knew it perfectly, as the reports emanating from him prove, that the relation of the value of the two metals is mobile; it has not ceased to vary more or less since the origin of civilisation. It was well understood that if gold, for example, fall in value in relation to silver, so as to be no longer worth fifteen and a half times its weight of that metal, the proportion recognised in the year 11, the consequence is, that it will become superabundant in the circulation, and that silver, on the contrary, will gradually disappear; since the natural tendency of debtors can never fail to be, to make their payments with the cheapest commodity: just as in the case in which gold should acquire a superior value to that which it possessed previously, gold would disappear. Phenomena of this kind have been observable in all times and in all countries. Gold and silver, like all other commodities, shun the markets where they are not taken for their full value, and flow towards those where they meet with better terms; consequently, it was well understood, and it is intimated in twenty passages of the documents which served as the preparation for the law, as well as in the exposé des motifs, that whenever a reciprocal change between the two metals should be manifested,* the gold currency should undergo a modification.

But the elements were wanting necessary for determining the extent of the change of the reciprocal value between the two metals, which might derange the monetary mechanism, as it was then agreed upon, and which might be of a nature to prevent the parallel circulation of gold and silver coins. It was not then thought necessary to say,—there shall be a recoinage whenever the relation of 1 to 15½, which now exists between the two metals in the market, and which is for the present given as the basis of the fabrication of the gold coinage, shall have been modified one per cent, or two, or three, or more or less. It was understood, and in that we have a proof of the good sense which is one of the qualities of the legislature, that it was left to experience to decide. It was agreed that they should wait until the signal was given by events: the word is Gaudin's, as may be seen in his first report. He trusted to the intelligence of future governments, to their good faith, and public spirit, for comprehending the language of events.

It is thus that it was left undetermined, in the system of the law of the year 11, by any positive sign, when the day would come for recoining the gold pieces, and changing the proportion of metal which corresponds with a franc. It is this indeterminateness which furnishes the excuse, or pretext, for the tolerance with which gold is now treated, as if it continued to be worth 15½ times its weight in silver,—a tolerance which falsifies our monetary system, and which threatens to open the door to the inconvenience and injustice which I have attempted to explain.

The measure which has been indicated in the preceding chapter has for its object to put an end to this deplorable indeterminateness, while still remaining faithful to the idea adopted by the legislator in the year 11,—that there should always be a legal fixation of the relative value of gold and silver, but also never forgetting the engagement which was at the same time entered into by the legislator when he said, in his expos4 des motifs, that the monetary system of France would henceforth offer “a guarantee for the fulfilment of commercial transactions and the conservation of property which we do not see” (they could say so in the year 11) “in the monetary legislation of any other people,”

CHAPTER IV.

on some inconveniences inherent in the combination, respecting a gold currency, recommended in this work.

The plans recommended in this work, respecting a gold currency, are they absolutely free from all inconveniences? I do not pretend that they are. It would result that from the fact that the cashier had in his charge gold coins which he was justified, on the 31st December, in considering worth a certain sum, he would, without having touched, or added to or deducted from them, on the 1st January, when the periodical revision of the tariff took place, possess the same gold coins in true relation with silver. What is said of cashiers would also be true of every private individual having in his house or pocket any gold coin. In what concerns the receivers of the public revenues the objection is serious. It seems, in fact, that they would be placed in a false position, and every six months (I assume that the revision would be half-yearly) be exposed to a clear loss, or find themselves in the way of making an unmerited profit. This difficulty, however, is not insurmountable. Would it not suffice, for example, if the cashiers were to state the amount which they had separately in gold and silver coins? It would also be well if they distinguished the sums which they held in bank notes. Such a task need not be very difficult.

With regard to the public in general, it would not be impossible to prevent private interests from suffering a serious loss at the end of each six months, in consequence of the depreciation of the gold which each individual might have on hand. In fact, everybody might so arrange as only to have just so much as he pleased in his possession. This rule might be easily observed, if, adopting an idea which has been thrown out, the law were to limit to a certain maximum, such as the sum of a thousand francs, the amount which the creditor should be forced to receive in gold; so that in private transactions, beyond this sum, it should be left to the voluntary agreement of parties to decide the nature of the money in which payment should be made. But it is a clause which would give rise to great difficulties in regard to the State, and to certain large establishments, such as the bank.

In all this I do not trouble myself about those individuals who should have hoarded large sums to keep them indefinitely concealed. If, at last, after a long lapse of time, they experienced a great loss, they would have only themselves to blame.

In fine, we must not forget that the evil of which, at this moment, we are seeking the remedy,—that is, the loss which the holder of gold specie might in spite of himself encounter, in consequence of the fall of that metal in the course of six months, would not, in all probability, be anything considerable. In fact, the case we are examining is rather imaginary than real. It is one of those hypotheses which we discuss in books when we are in the mood for argumentation, but to which the administrator and statesman attach but little importance.

Let us, however, acknowledge, without hesitation, that the system which is here submitted to the appreciation of the public, and which is destined to maintain the parallel circulation of the two metals, without violating the sacred principle of a single standard, will not insure at each instant an absolute compensation or a mathematical equilibrium. It is a mechanism which in its movement may rub a little. But, I repeat, the question is not whether it be perfect. It is rather,—what is the combination which deviates the least from perfection, and which offers the fewest inconveniences? When once we have proposed and accepted a plan for maintaining, parallel with each other, the two metals in circulation, still remaining faithful to the principles which prescribe but one standard, and always respecting the law and the precedents which very opportunely in France assign this attribute to silver, the only question is,—are the accidental derangements which might affect the system, such as ought to frighten us, and are they comparable with the evil effects which we have reason to expect from the other combinations? There is the question, the whole question; and thus stated I think it wDl be answered in the negative. In any case, the worst of all systems is that of which France has offered the spectacle for several years, not in the name of the law, but in opposition to the letter and text of legislation, and in consequence of the inattention of the public authorities,—I mean that in which we see affairs proceeding as if the two metals were placed on the same footing in the currency, and were one as well as the other invested with the dignity of the standard.

I am acquainted with some intelligent persons who are of opinion that the best system would be that which has prevailed in Belgium, in Holland, in the Germanic Confederation, and in Naples, the principle of which is to leave absolutely to commerce the care of fixing the value of the gold coins in relation to silver recognised as the standard. The combination here recommended, has, in relation to the above plan, the fault of a certain degree of complication; but having regard for the habits and manners of life of the French public, I think it preferable. It is more in conformity with the traditions established by the law of the year 11, and with the object of that law,— to establish the parallel circulation of the two precious metale, while starting from the principle that silver is the standard. Doubtless, the system which I shall call Dutch, on account of the nation which was the first, in these later times, to put it into practice, presents itself with the authority of several governments who have adopted it after mature deliberation, and to whose enlightenment I render homage. Such a preference is an argument of great weight. This system subsists, and is in operation in several States which have adopted it to the satisfaction of their populations. But it must also be admitted that it is a weighty argument in favour of the combination which I have developed,—that it is the continuation of our antecedents, at the same time that it is in its whole extent desirable as consistent with scientific principles. Moreover, if experience should develop any unforeseen and grave inconvenience, we should always he able to revert to the plan which has been preferred by the above-named governments.

CHAPTER V.

of a plan recommended for maintaining the parallel circulation of silver and gold.

M. GustavedeMolinari, the distinguished professor of political economy, at the Mush Royal de l'Industrie, in Belgium, and at the Institut Superieur du Commerce, at Antwerp, has recommended a monetary mechanism calculated to maintain in France the double circulation of silver and gold, whilst recognising in silver the sole quality of standard. To assure to gold, in all the latitude possible, the function of auxiliary which the law of the year 11 has assigned to it, and to prevent at the same time the possibility of its being surpassed, M. de Molinari would have gold coins containing a quantity of metal sensibly inferior to that which corresponds with the value of gold in its relation to silver. This would, according to him, be giving to gold coins the character of tokens, in the same way as in England is managed with silver. In this system, the French government would reserve to itself the eole right to issue gold coins, as the English government does in the case of silver; and, as the circulation of France is becoming saturated with gold, it would be necessary, provisionally at least, to stop its fabrication. Besides, to give to the holders of the gold currency a guarantee against excessive issues, to assure in some degree the value of this auxiliary money, made from a metal subject in our day to a depreciation, it would be necessary to make it always payable on demand, in silver, like bank notes. These conditions complied with, the value of the gold currency would be as stable as that of the silver on which it was based, and, as gold is more convenient in use than silver in the generality of transactions, it would be resorted to in preference. The gold actually in circulation would not be withdrawn to be exchanged for silver, any more than are the bank notes, and the monetary regime of France would unite the security of the system of Holland and Belgium, which is based on silver, with the convenience of the English system, which rests upon gold.*

This system is certainly somewhat seducing; at first sight, it seems calculated to remove all difficulty; we should have, for example, gold coins of the weight of 5 grammes of nine-tenths fineness, to which would be assigned the value of 25 francs, notably superior to their real value. Owing to the power of converting them at will into pieces of silver of the effective value of 25 francs, there would be a guarantee that they would circulate with the public for the nominal value which the legislature had assigned to them, and for the excess even of that value relatively to the real value, and thus the monetary mechanism in which these coins should figure, would seem to be forever beyond the reach of the perturbations which the fall in gold can occasion.

Let us in the first place offer an observation on the name which M. de Molinari gives to the operation which he recommends. Would it really be the issue of a gold token? In the accurate sense of words which could never escape a person so highly versed in economical questions, the denomination of token is not that which is appropriate in the present case. The function of a token is, in fact, to be admitted into payments only to make up an amount. In France, the token, which is in bronze, is limited to five francs; in England, the silver token is limited to payments of two pounds sterling, or about fifty francs. The pieces of gold of M. de Molinari having no such limit, they could not be considered as tokens. What would they be then? Signs of credit, like bank notes, with this difference, considerable however, that the substance instead of being of paper would consist of the most precious of the metals. But this difference even is not perhaps to the advantage of the system: if we are to have bank notes, it is more simple and advantageous to make them of paper.

M. de Molinari has felt the analogy between his gold counters and the bank note, and he has formally recognised the necessity of giving them the support of a voluntary exchange for silver money. The guarantee is, undoubtedly, valuable, but it is also one of the weak sides of the system, in so far as it would be an expense. It would be aecessary to establish special treasuries, with a reserve of specie in silver sufficient for the purpose, or it would be necessary for certain public establishments to take upon themselves the obligation of holding always for this purpose a considerable sum in five-franc pieces, which would, in point of expense, amount to the same thing, and besides would be contrary to the rules established by the French administration for the good order and security of the finances of the State.

I repeat the opinion just expressed; if it be a question of putting into circulation signs of credit, of twenty-five francs, it were better that they should be in paper. In fact, an instrument of exchange, composed of pieces of silver and of bank notes of 25 francs, would be acceptable, except for the circumstances which I am about to note.

Germany has for forty years carried on its affairs with an instrument of exchanges, composed almost exclusively of pieces of silver, thaler8 or florins, and of bank notes or notes of the State, both of small amount. Gold figures there only as an accessory of small importance and almost accidental.

In France, the law of 1857, which prolonged the privilege of the Bank of France, allows the circulation of notes of 50 francs; with notes of this denomination and with silver money, the instrument of exchanges would be complete without anything else.

It must not be concealed that bank notes of 25 or of 50 francs (£1 or £2) present some inconveniences, and expose the public interest to some errors. Notes under five pounds sterling have been prohibited in the United Kingdom, excepting in Scotland, where the smallest note authorised by law is one pound sterling. What are the grounds on which a great number of men versed in affairs, and familiar with economical science, have pronounced against these small notes? It is primarily the danger of forgery: if these small notes are left to circulate after being soiled and torn, there is reason to fear that they will be imitated. Then, there is also the possibility of a panic which might seize the holders of small notes more easily than the richer and more intelligent classes, to whose use the notes of ½5 are chiefly restricted. The effect of this panic might be to lead a mass of individuals to precipitate themselves upon the banks to obtain the immediate payment of their notes, and then these establishments might be obliged to suspend their payments.

Now, these two dangers would also subsist to a sufficiently marked degree with the gold token of M. de Molinari, at least from the moment that it should offer, very decidedly, one of the distinctive characters of the token, of having a nominal value notably superior to its intrinsic value. If there is a violent temptation to coin paper money, in imitation of the signs generally accepted by the public, such as the real bank notes, we have only to wait until the dishonest speculation of issuing gold pieces passing for 25 francs, and being only worth 15, shall become also profitable. It would be even more easy to fabricate these counters than to forge the bank notes. The imitation of these latter is far from easy, and might be rendered very difficult. On the contrary, the reproduction of gold coins, of which the impression should have been more or less defaced by the circulation, would be a work of great facility. It would be a mere joke for the manufacturers of livery buttons, furnished with such machinery as is now found in workshops of that kind in certain towns like Birmingham.

The danger of a panic, which might lead the mass of the population to come and demand payment for these counters of gold, in their nominal amount in silver, would be almost as great as with the small bank notes, on the hypothesis of which I am speaking of a great divergence between the nominal and the real value.

It is true that we should escape from these two perils by imposing the rule of having, between the nominal and the real value, only a deviation of five, or at the utmost of ten per cent. But then the combination would become burdensome on account of the sum which it would be necessary to keep in hand, in silver money, to meet the demand for payments. Suppose an issue of a milliard of francs (£40,000,000) in gold tokens: if the divergence is 7½ per cent, that will be a saving of 75 millions (£3,000,-000) in the capital required to furnish the instrument of exchanges; but if the public treasuries destined to guarantee the payment on demand absorb for this purpose a reserve of 100 millions in silver money, the operation ends in a loss.

CHAPTER VI.

of the resolutions of a commission appointed by the minister of finance in mdccclvii.

After the discovery of the mines of California, and before that of the auriferous deposits of Australia, a commission had been appointed by the French government to examine into the probable effects of the great and rapid arrivals of gold consequent on the operations in the valleys of the Sacramento and the San Joaquim. This commission came to no conclusion; the indications of experience were then too incomplete. The facts having been afterwards much strengthened, a new commission was named the 7th Feb., 1857, by the minister of finance.

The commission received instructions “to inquire into the principal causes of the monetary situation, to investigate the various questions which arise out of it, and to report its opinion on the measures called for by the general interests of the country,” In these terms, the outline traced for the labours of the commission was extensive. In February, 1858, it had finished its labours, according to a more restricted plan which it had traced for itself, or, to speak more correctly, which had been suggested to it, and which it accepted, and in its name a report was presented, which it is impossible to pass by in silence.

In the programme of which I have just spoken, as having been received and accepted, California and Australia were not upon the first plan; the fact of the exportation of silver from France was the phenomenon to which the greatest importance was attached, and everything was made subordinate to it. Australia and California are not even mentioned, no direct allusion is made to them.*

Thus the point of departure for the deliberations of the commission was not, perhaps, the best that could have been chosen. As to its conclusions, they are of a nature to astonish those who are conversant with economical questions; here is, in fact, the substance of the report:— The principal cause of the disturbance witnessed for several years in the monetary system of France, is to be traced to the extraordinary demand for silver for exportation to the remote East. This unusual demand has caused a rise in the value of silver as compared with other commodities. As for gold,—it does not seem to have fallen, notwithstanding the large production of California and Australia. The best mode of remedying the difficulty which we encounter would be to maintain, compulsorily in France, the relation of 1 to 15½ established, or rather confirmed, by the legislation of the year 11. To prevent the foreign market from exercising in this respect any influence on the market of France, it is only necessary to put a duty on the exportation of silver, and to establish penalties against the heads of establishments who engage in or connive at the trade. Thus the conclusion of the commission is that a duty should be laid on the exportation of silver. The commission even adds that it should be a high duty. Moreover, the better to impede exportation, the selecting or assorting of pieces of money shall be an act punishable under the penal law.

Now, if there be anything confirmed by history, it is that the efforts of governments are powerless to regulate the value of gold and silver in relation to other commodities, or to one another, and that they are equally so to compel the precious metals to remain in the interior of a State, should commerce give the impulse to their exportation. This twofold observation is a truism which one regrets to have to revive. If there be in political economy anything universally acknowledged, and with which intelligent governments are in accord, it is that the precious metals should be treated as merchandise, and left to the free action of commerce, including, of course, the liberty of melting and all that appertains to it. The conclusion of the commission is right in the teeth of these well accredited doctrines. On the subject of the currency, we should be thus embarking with all sails set upon the waters of the ancient regime, when other civilised countries, led by the voice and example of France, had agreed to follow another course.

It may then be believed, on its own simple announcement, that the unanimous opinion of competent men, will be against its recommendations. They rest, in fact, on ideas which, thank Heaven, time has disposed of.

In fine, the commission proceeded, as will be seen, in a manner to deprive of all authority its chief proposal for preventing the efflux of silver by means of a duty on exportation. Before coming to that vote, it took the laudable course of consulting the most eminent and enlightened members of the commercial and banking interests, eight of whom, of the highest standing, were summoned to its presence. They were examined separately upon this special subject, and the question was presented to them in every form. The reiterated testimony of these eight persons was unanimous: they persisted in repelling the idea of a duty on exportation. Under these circumstances, the decision of the commission is presented in not very favourable colours. When the commission decided to call before it, one after the other, eight important persons, in order to consult them in detail on a given subject, that is, the propriety of stopping, by a resort to the material obstacle of a custom-house, the export of silver, it was because it felt the necessity of obtaining further enlightenment. But, then, how could it decide against the unanimous and very decided opinion of those eight counsellors whom it had chosen as the most competent to edify it?

In the history of the European currencies, the commission would have found, at an epoch not very remote from our own time, a precedent which seemed almost expressly made for it, so well was it adapted to the circumstances in which it deliberated, and especially to the position of the very question which it had accepted.

Towards the commencement of the eighteenth century, the monetary system of England underwent a perturbation, of which the most apparent phenomenon was the same as has been repeated in France since the discovery of the mines of California and Australia: the silver was either sent abroad in coins, or was cast into the crucible to be exported in bars, and gold took its place in the circulation. The British government, alive to this state of things, asked the advice of the great Newton, who was then director of the Mint, and who brought to the performance of the duties of his office the same care, the same acuteness in the observation of facts, and the same earnest spirit of analysis to which he owed, in the progress of science, the admirable discoveries which have immortalised his name. To the question which was submitted to him, the 12th August, 1717, to determine the causes of the exportation of silver, and to indicate a mode of putting an end to it, Newton replied, the 21st September, in terms which I will shortly explain.

At that time, custom-house duties were used and abused for all sorts of purposes, and every kind of restriction, besides, was placed on the industry of the country. At the same time, the extension and exaggeration of the penal laws were expedients to which authority eagerly resorted, and which were very convenient, because they relieved them from the necessity of maturely studying the questions which presented themselves, and of comprehending the origin and nature of things. Newton would have, therefore, been excusable if he had recommended more rigorous acts against the exportation of silver, and the application of a severe penalty directed against tokens and light weights. But measures of this Jrind were not those towards which a man like Newton directed his mind, and in England already more intelligent traditions had established themselves, more care for public opinion, and more respect for human liberty, in its relations with industry, as well as with the other aspects of civilised life. Thus, then, proceeded Newton:—

After having passed in review the value of gold and silver in the different States, and having shown that in England the legal relation gave too much to gold to the detriment of silver, he argued in the following manner:— If silver leaves the shores of England in crowns or in ingots, the produce of coins remelted, and gives place to gold, it is. because the value which the monetary legislation assigns to it, in relation to gold, is not correct. The law supposes, in fact, that the relation between gold and silver is that of one to a little more than 15½,* whilst in the general market of Europe it is barely 1 to 15.* That, let the legal relation between gold and silver be re-established upon the true basis, and by that act we shall have destroyed the temptation to export from England silver in preference to gold. To effect this, nothing more need be done than to withdraw 10 or 12 pennyweights from the value assigned to the guinea in silver money. For greater prudence, Newton advised the reduction to be made in two operations, and to commence by an abatement of six pennyweights.†

The note of Newton is a model of logic and precision. We recognise in it that firmness and justness of mind which laid hold of the foundation of questions, threw aside accessories and extraneous or indifferent objects, and went straight to the end in view. The reasoning of his note applies word for word to the problem which Our Commission had to solve. Here is in effect what may be said in our day:—for several years, silver has been leaving the shores of France, in crowns, or in ingots, the produce of coins remelted, and giving place to gold, because the value which the monetary laws assign to it in relation to gold is not correct. The law supposes, in fact, that the relation between gold and silver is that of 1 to 15½, whilst in the general market of Europe, it is sensibly less. Let the legal relation between gold and silver be re-established upon the true basis, and by that act we shall have destroyed the temptation to export from France silver in preference to gold. To effect this, nothing more need be done than to withdraw from the value attributed to pieces of gold in silver money a given quota, certain to retouch periodically this relation, so that it shall always be in harmony with the real state of things. I put aside here the question whether we should render the monetary system of France more conformable to principle, and whether the application of this mechanism to the geld coins would not be better effected by replacing the quantities of metal which constitute the coins in usage, by others which contained a round number of grammes, of five or ten, for example.

It is much to be regretted that a commission which, deliberating in 1858, at Paris, the centre of European intelligence, and the metropolis of the civilized world, as we are in the habit of calling it, should have refused to adopt the opinion of so great an authority as Newton, so competent in the matter,—an opinion put forth under circumstances from which what is passing in our day in France respecting silver money might have been borrowed, and which was, moreover, sanctioned forthwith by government at the instance of parliament.** It is difficult to conceive how, repudiating such an authority, this commission should have permitted itself to draw its inspiration from the edicts of the ancient regime upon money, which are monuments of ignorance and despotism.

CHAPTER VII.

of various acts which the legislation of the ancient regime upon money treated as crimes, and with regard to which some persons of our day propose to establish penalties. —selecting, and melting; trade in coins; exportation.

In the course of this work I have already offered some explanations of the various operations on the currency which the ancient regime punished with the utmost rigour. This scaffolding of penal laws, pronouncing almost in every article the pain of death or the galleys, accompanied with confiscation and fines, generally of enormous amount, was overturned, after the Eevolution, by the precise dispositions of the laws and ordonnances, or implicitly by the effect of the new direction, eminently conformable to reason, as well as to the experience of ages, which the legislation upon money has taken since 1789.

In the opinion of the moderns,—an opinion which has passed into the laws of the great civilised States, gold and silver are commodities which, in exchanges, pass for the value which belongs to them. The trade in these metals is free, like that of other merchandise. A piece of coined money is a certified ingot, as to its weight and fineness,—and the certificate consists in the impressions which it has received. Between this sort of ingot and an ordinary ingot, the difference of value is restricted to the expense which attends the affixing of the certificate, including the previous operation by which the metal is brought to the legal fineness, and these expenses are very trifling. Not only is the trade in the precious metals, whether coined or in ingots, perfectly free in the interior of States; but it has been acknowledged even in countries which have maintained a very restrictive system of international commerce—France is in this predicament,—that the importation and exportation of gold and silver, both in coins and ingots, ought to be perfectly free. Inasmuch as the precious metals, whether coined or not, are merchandise; it follows, that the private individual who has received a piece of money can do with it what he will, and, consequently, can melt it. The only use of it which is interdicted to him is to put it in circulation again after having diminished its weight by “sweating,” or otherwise, because the quantity of metal which it contains is no longer consistent with its impression, and to pass it to another for legal weight would be a deception as to the quantity of merchandise, or, indeed, a sort of forgery of a public document. In a word, the modern doctrine on the subject of money—a doctrine accepted not only in the writings of philosophers, but also in the codes of the great civilised States,—is in almost every way the very opposite of the ideas of the ancient regime.

However, the Moniteur, about a year since, contained an announcement which would seem to indicate that the government considered as still in force the laws and edicts of the ancient regime relative to money, and especially against the following operations:—

• 1st.Picking, or selecting, which some persons think to stigmatise under the affected name of billonage or trdbuchage;
• 2nd. Melting;
• 3rd. Buying and selling at a premium.

Proceedings were actually commenced, at the end of the year 1857, against some of the principal moneychangers of Paris, who resorted, without concealment, to these practices. It is true, that the proceedings were almost instantly suspended; doubtless, because the government, after a more careful inquiry, found that the statements inserted in the Moniteur were very doubtful. But the commission appointed in 1857 by the minister of finance, appears to have been inclined to give some validity to the revived pretensions of the ancient regime, of which the official journal had made itself the echo. It alluded to the point whether the old Draconic laws, which were in existence prior to 1789, were still in force, without solving the question, and it expressed itself in severe terms upon the whole of the operations referred to above; and it has been seen in the preceding chapter that, with regard to some of them, it recommended the enactment of penalties if none already existed. With such tendencies, avowed and patronised by an important commission, a few more observations respecting these operations may not be superfluous.

Let us take successively the acts in question; and first, let us speak of billonage or trihuchage, which we will call by the modern and more simple and significant name of picking or selecting: we will speak of it without separating it from the remelting, which is the object for which the coins are generally selected.

The reader has seen, above, that the “picking,” such as was begun to be practised in France on a large scale, about 1825 or 1830, had for its object to withdraw from the circulation, for profitable use, the pieces of 5 francs, which, owing to the imperfection of the ancient processes both for proportioning the quantity of silver, and for extracting the gold from the ingots of this metal, contained a value superior to 5 francs. We think we have shown that this special case of selecting, dating about thirty years ago, and of which we are now speaking, was not merely an operation licit in itself, but useful to society; and that apart from these accidental and temporary circumstances, and with money well made, that is, where the standard of weight and fineness fixed by law had been observed, the practice of “pieking” would have been impossible; from whence it follows that, if the government wishes to prevent this practice, it has the power of doing so; it has only to take care to fulfil its duty, which is to see that the money is struck in conformity with the law.

Nevertheless, the advocates of the resurrection of the edicts of the ancient regime on the coinage, with the view of justifying the severities which they call for against “picking” and melting the coins, have represented that these operations are nothing less than the perpetration of a robbery, to the prejudice of the State; for, according to them, and one of the organs of this opinion has said as much in round terms, money is in a certain sense public property, from which they draw the logical consequence that a private individual can not touch it without committing a fault or crime. Nay, more, these acts would constitute the crime of treason, inasmuch as they would be a want of respect for the work of the State. Such words have actually been employed.

How, and in what respect, can money be public property? I have exchanged my merchandise, say, for example, the hectolitre of corn, for another commodity, which shall be 100 grammes of silver of nine-tenths fineness, and these 100 grammes consist of four discs of 25 grammes each, commonly called 5-franc pieces. Why should the 100 grammes of silver be public property more than the hectolitre of corn? Is it because the public has need of discs making 100 grammes of metal? But it seems to me that the public has greater need of the corn. Is it because these discs have been by the care of the State made of a certain weight and fineness, and certified as such by the impressions stamped on the obverse and reverse? But the very moderate cost of these operations has been paid to the. directors of the mints who have performed them; the private individual who brought the ingots, from which the discs were produced, to be coined, paid the coiner. Besides, the State has also certified the hectolitre of corn, since it has verified the measure through which the corn has passed. If the piece of money which I carry in my pocket is in a certain sense public property, or the property of the State, there is no form of riches, no species of property which is not in the same predicament; for there is none which does not contribute to the national prosperity, to assure our existence or subsistence, and which has not more or less the guarantee of the State, were it only by the public force and the courts of law which check or prevent deception in the quantity and quality of merchandise. This would be especially true, in a certain sense, of landed property, which, in fact, by the taxation which it supports, may be considered up to a certain point as belonging to the State. Inasmuch as the land pays on an average (in France) the eighth of its revenue for income tax, it may be said to that extent to be the property of the State. If, then, it were finally admitted that money is in a certain sense public property, and that, in consequence, those who receive it in payment are prohibited from disposing of it as they please, the writers who at all times, and under all circumstances, are so fond of appealing to authority, would have no great difficulty in proving that the State is the co-proprietor of every real estate, and that the assent of the government is necessary before any landowner can alienate or even improve his property. This lands us in simple communism. Nor ought it to surprise us, if we commence with a programme in which are inscribed the inventions of the Eegency, the reminiscences of the system of Law, and the ordinances of the worst days of Louis XIV., a prince who, if he exhibited a grandeur of genius and character, was still an unmitigated despot, and one who showed less respect; for the rights of property than any other sovereign who has occupied the throne of France.*

A piece of money in the hands of its owner is his private property as much as his field, his furniture, his food, or his clothing. The holder may cast it into the river; how much more reasonably, then, may he be entitled to select from the hundred 5 franc pieces, which he has in his cash-box, ten pieces to be melted, if such should be his interest or pleasure. It were to subvert all sound doctrines respecting property, to admit that the State retains any right whatever over money, excepting it be to require that it should constantly possess its prescribed weight and value; because, money being a measure, as well as a merchandise, it is the duty of the State to see that it remains in conformity with its type, the same as the metre, or the gramme, or the litre.

As to the imputation of a want of respect for the work of the State, with the best possible intention, I cannot understand it; but it seems to me that they who put forth this grievance would be better employed in considering the respect due to the rights of private property. Are they to be understood to mean that coins ought to be assimilated to public monuments, and that he who degrades them by throwing them into the crucible, deserves the same punishment as the person who should have mutilated a statue in a public place? But there is nothing in common between a piece of money, which is only a certified ingot, and a statue, which the public gratitude may have erected to a great man; the artistic portion is quite an accessory to the coin, and moreover the piece of money is private property, whilst the statue belongs to the community.

But, perhaps, in alleging that to melt the money is to show a want of respect for the work of the State, it is meant that as it bears the effigy of the prince, to destroy that effigy would be an outrage on the sovereign. This view would have the disadvantage of being borrowed from the official doctrines of the evil days of the Eoman Empire, when the Emperor was the object of a hypocritical idolatry, and when the cases of high treason were multiplied indefinitely. But if it be a crime to destroy, by remelting a piece of money, the effigy or the armorial bearings of a prince, it will also be a crime to tear a stamp which shall represent the one or the other; and to be indictable at the assizes, it will suffice to have thrown into the fire an old sheet of stamped paper.

The pieces of money which pass through the hands of the State, are, during the time that they remain in the possession of the receivers, public property, or property of the State. The State has then clearly the right to make such use of them as the public authorities shall have deemed advisable; and thus, for example, after 1825, it might have subjected the 5 franc pieces, with which the public treasuries were gorged, to the operation of refining, and so have secured the profit which has fallen into the hands of the refiners. It may even be observed that the movement of the taxes brought naturally, and without effort, an immense number of pieces of 5 francs into the hands of the agents of the State, whereas the refiners were, and are, obliged to procure them at much expense, and even by the payment of premiums. In this point of view, the operation would have been easier for the State than any one;* but even in the very narrow point of view as to the profits to be derived from the refining of the 5 franc pieces, to extract the small excess of silver, and the minute proportion of gold which, thirty years ago, were left in them, the right of the State does not exclude that of individuals. The one and the other occupy similar ground; they have the same point of departure and the same goal. They co-exist for the same reason, and, under this aspect as under every other, there is no ground for saying that the operation of “selecting” and remelting is a robbery perpetrated to the prejudice of the State.

But it is insisted that, if private individuals are free to select the coins, so as to separate the heaviest for remelting them, the light pieces only will be left, and the currency will be vitiated. To console those persons who feel this apprehension, it is only necessary to remark, that with money properly made, that is to say where the coins shall be in conformity, both as to weight and fineness, with the requirements of the law of the year 11, the speculation of “selecting” and remelting is no longer to be feared, since those who undertook it would assuredly be ruined. There is reason to believe that, at the present time, thanks to the perfection at which the mechanical and chemical arts have arrived, the limits of weight and fineness might be diminished—especially the former,—which would still further tend to render the operation impossible. Doubtless, when the coins have circulated for a long time, they lose a sensible fraction of their weight. The careful experiments of Messrs. Dumas and De Colmont, prove that a 5 franc piece, which has passed from hand to hand for a century, will have lost a gramme and a half, making about 3 centimes; thus the private individual, who wished to export the silver coins after having remelted them, would avoid the old pieces, and would make a selection of those only which were new and almost perfect. In this way, it is true that, if the government has taken no precaution for withdrawing the coins which are worn with time, selecting and remelting will have the effect of leaving only those pieces which are of diminished weight in circulation. But does it follow that, to prevent this process of vitiating the currency, the best mode is to invent new penalties, or to revive the old edicts against “selecting” and remelting?

It is not necessary to resort to the argument that the power of “selecting” and remelting pieces of money is the natural and necessary corollary of the rights of property. Apart from this consideration, however decisive, it would he easy to cite a score of cases in which the operations of “selecting” and remelting are of palpable convenience, and of an evidently legitimate character. A jeweller wishes to make use of some of the silver money in circulation to meet the necessities of his business. It would be unreasonable to interdict him from taking in preference the heaviest coins; and, however much it might be forbidden, he could not be prevented from doing so. The merchant who wishes to discharge a debt abroad with silver specie, will in the same manner prefer the coins which are of full weight, because the foreigner is too shrewd to accept in any other way than by weight the pieces of money that are sent across the frontiers.

In truth, we are dwelling too long on these ideas, which public opinion has already condemned, and which have for ever disappeared from the codes of all civilised States. We know what was the origin in former times of the interdicts levelled against the melting of money, and the “selecting” which usually preceded it. The spirit of cupidity and spoliation dictated that prohibition in times of ignorance, and it was afterwards perpetuated under the financial pressure to which unscrupulous governments have been constantly exposed.

Let us call to mind a remark which has been made, that to prohibit the “selecting” or remelting of coins, became a useless severity from the moment that the exportation of money was permitted. It was thenceforth only necessary to transport the specie across the frontier to be enabled to carry out the remaining process with impunity. There is, then, every kind of motive why the laudable idea of maintaining the integrity of the French coinage, and its conformity with the type determined by the law, should not be diverted into a question of proceeding with rigour against the operations of “selecting” and melting. It is otherwise that it must be realised, and it is in another direction that the problem must be solved. To carry on the government with a penal code, is consistent enough with barbarous nations, where the ruling power practises unmitigated despotism at all times, and, between two courses, prefers that which is the most convenient for its idleness and ignorance; but it is not becoming to those civilised States where the government professes to respect their citizens in their persons and property. With civilised nations, the penal code should reserve its severities for acts which the conscience condemns; but it must not be allowed to strike with the sole object of sparing the government the vigilance and care which are among the number of its imperative duties.

The case thus stated, where is the difficulty which we shall now encounter, and whence does it arise? With time, an inequality may and must inevitably manifest itself between pieces of money of the same denomination. Some, which are old and worn with long circulation, will weigh less than the others which are new, and it is feared that if, in these circumstances, the practice of “selecting” he permitted, private individuals will make a profit out of the withdrawal of the latter, so that the former only will remain in circulation. Very well. It is well to foresee the fact, for history attests that it has frequently, if not always, occurred. But it is also proper to ask if the motive for which private individuals put aside coins of full weight, is not precisely the existence in juxtaposition of the pieces of light weight which the vicious or incomplete wording of the law, or its unwarrantahle interpretation, would assimilate to coins of full value. The cause of the evil is this favour which, in contempt of principle, it is attempted to accord to coins of light weight. Let the government and the legislator, acting up to their mission, banish from the circulation these defective coins, or authorise them to pass in payments for only what they are worth, and from that moment no one will have any further interest in separating the pieces of full weight. In a word, the true solution, that which does violence to no one, that which troubles no citizen in his industry and liberty, is either to withdraw the light coins, or to declare by law that they shall only be taken in payments according to their weight.

It may not be useless here to remark, that in conformity with what has been done in other countries, where the law has declared that light coins should only be taken for their weight, it would be well, in case such a measure should be adopted in France, to admit that, in small payments up to a certain sum, the pieces should pass for their full nominal value. The English law of 1774 upon the silver currency fixed this limit at £25 sterling (about 630 francs). We might, by analogy in France, fix the limit at 500 to 600 francs. It seems, however, that it would be better to name a still lower sum, 100 francs, for example.

As a general proposition, the withdrawal of the light coins would be easy. We know that in the United Kingdom, the Bank of England takes charge gratuitously of this service, and supports the expense. She weighs all the money which the movement of trade brings to her counter. For this purpose she has a machine which effects the object very skilfully. Similar machines might be used in France, at the bank as well as in its branches, and in the offices of the principal Receivers General,. They would thus intercept every piece which should be below the standard weight. If a machine of this kind were kept at every mint, for the verification of the coins which issue from the balance, the necessity for the establishments which we have just enumerated would be notably simplified. The expedient which consists in deciding legislatively that coins should only be received by weight in payments beyond a certain sum is quite practical, and has for authority many precedents. This would, perhaps, be in itself sufficient. However, for permanent exactness in the monetary system, which is important in the rapidity of transactions, it would be well to combine this act with the withdrawal of the light coins, by establishing weighing machines in the public establishments through which the money flows.

Experience, in all nations, has shown the impossibility of maintaining in parallel circulation, under the same denomination, coins of full weight and fineness, and pieces of inferior value, because it is contrary to the very nature of things to which we must all conform ourselves. The light pieces have always and everywhere expelled those of full weight and fineness, and to keep the latter in circulation it has been always necessary to throw the others into the crucible of the Mint, or to give them a circulation according to their value. On this point, the annals of England may be consulted with peculiar interest.

In France, at the present time, the withdrawal of the light coins, which have accumulated since the year 11, would only be a serious operation as regards the 5 franc pieces, and we may form an approximate estimate of what it would cost so far as they are concerned. The wear has not yet had time to be very considerable; the French and foreign refiners have withdrawn from the circulation, from the motives already explained, the chief part of the coins anterior to 1825, and even to 1830. The oldest pieces have, therefore, been hardly a quarter of a century in circulation; the corresponding loss would not be more than eight centimes per piece. Upon the sum of a milliard (£40,000,000), which would have the average circulation of about fifteen years, the loss would be 48,000 kilogrammes or 9,600,000 francs (£384,000). There would also be the expense of melting and recoining, which, according to the tariff of the Mint, would, supposing it to be general, amount to 7,500,000 francs (£300,000). We thus reach a total expense of 17,100,000 francs (£684,000). If the mass of 5 franc pieces remaining in France at this time, amount, as some persons suppose, to 1,500,000,000 francs (£60,000,000), the expense would amount to 25,650,000 francs (£1,026,000), always with the supposition, evidently forced, that the recoinage would be general. The sum is large assuredly, but the advantage of having thenceforth a sound currency is well worth it. These charges would be spread over two operations, or three at the utmost, because in cases of this kind success depends on rapidity of movement. It must be added that the sum of 25,650,000 francs is the maximum, which for several reasons would never be reached. It is likely that for an undertaking so vast, the State would come to an agreement with the directors of the Mint for a reduction of the tariff. In the next place, the coins of a date anterior to 1825 and 1830, which are still in circulation, would yield a profit rather than a loss. And, besides, some of the pieces would be found above the legal weight and fineness, and consequently would not require to be returned to the crucible.

Under William III., a century and a half since, parliament voted eagerly £1,200,000 sterling to re-establish on a sound basis, that is in conformity with its type, the silver money which had been worn by circulation or excessively “sweated,” Weight for weight, £1,200,000 would make 30,000,000 francs of our money; but taking into account the greater value of silver at that time, it would be equal to 70 or 75 millions of francs of our day.

A word or two upon the purchase and sale of coins at a premium. Latterly, some persons have made violent efforts to incriminate those who are engaged in these operations. The vehemence with which they are attacked is hardly explicable, inasmuch as they follow a commercial pursuit, that of the money-changer, perfectly understood, and duly licensed. In every age and in all countries this commerce has existed, because it is useful and necessary, and because it is not condemned by any of the principles on which society is founded. Ignorant governments have often tried to subject it to unjust restrictions, opposed to the public interest, but they have always failed in their efforts. In France, previous to 1850, every one who went on a journey bought gold at the changers at a premium of about 10 or 20 centimes per piece of 20 francs; neither justice nor the government frowned on these operations; everybody admitted that they were quite practical and legitimate, both on the part of the changer who sold, and the traveller who bought. At present, the premium has passed from the gold to the silver; by what sorcery is it that what was formerly innocent should now become criminal?

A fact, however, has occurred, the announcement of which has cooled the ardour with which certain persons have set about demanding the application of the edicts of the ancient regime agrinst the purchase and sale of coins at a premium, and also against the trade in ingots, as often as they were at a premium in relation to the tariff of the Mint. It has been observed that the Bank of Trance, which is treated with merited consideration by the State, gave itself up to this commerce on a grand scale at the very moment when it was denounced with so much hubbub, as a crime against the rights of the State. The monthly returns in the Moniteur, upon the subject of the Bank of France, contained a prominent announcement during the latter part of 1855, and the whole of the years 1856 and 1857, in the following words: Premiums paid for the purchase of gold and silver bullion. These transactions were mostly in ingots, but they also included coined specie, which even for the Bank were preferable, inasmuch as the Bank purchased ingots only to send them to the Mint. Besides, there is no way of distinguishing them: the trade in ingots and that in coins are inseparably connected; they are so practically, as well as in the ideas of those retrograde writers who have astonished the public with their passionate appeals for the intervention of the government. The old edicts were equally merciless towards the one and the other of these operations. The edict of the 24th October, 1711, the application of which has been demanded recently in France, contains, in the very article which prohibits the melting of money by private individuals, an interdict against the purchase of gold or silver bullion at a higher rate than the tariff of the mints, and the penalty consisted of confiscation, with the addition of “an arbitrary fine “ (I quote the words of the text) "ivliich shall not be less than the value of the specie confiscated,” At this rate, the Bank ought to be condemned to pay, for confiscation and fine, a fabulous sum, something like 2 milliards (£80,000,000), if not more: for it probably purchased more than a milliard in the course of the three years 1855, 1856, and 1857. In virtue of the salutary principle of equality before the law, it would have been impossible to have summoned before a magistrate the money-changers, without placing beside them at the bar, the governor and directors of our great financial institution.

On the subject of the exportation of specie, of the penalties with which it was formerly visited, and of the idea which has been recently put forth, of either reviving them in full vigour, or with some mitigation, or of substituting for them a custom-house duty, I will add nothing to that which has already been said previously (Section V., Chap. V.), and again, more specially, in the preceding chapter.

CHAPTER VIII.

of a different solution which has been recommended, and which would consist in the adoption of a gold standard.

In the midst of the difficulties with which our monetary system is now surrounded, some persons have proposed a solution which would consist in withdrawing from silver the quality of the standard, and attaching it to gold. It would be understood that the franc, deprived thenceforth of all connection with our metrical system, would be composed of about 29 centigrammes of fine gold, or of 32 centigrammes and a fraction of gold of the fineness of nine-tenths. As regards silver, the only choice is between the two following courses: either to reduce it to the condition of a token as in England, or to lessen the proportion of metal contained in the piece hitherto called a franc; it might contain 4 grammes of fine silver instead of 4½ grammes, with the power of afterwards rnaMng another diminution if the divergence between gold and silver increased. These two combinations resemble each other very much, they spring from the same source, and are tainted with the same vice. In both cases the franc would cease to be what the law has established: 4½ grammes of fine silver. But the attempt may as well be given up, for do what we will, it can be called nothing but coining false money. When Philippe le Bel diminished the quantity of silver contained in the crowns of his time, he never did anything more serious or more characteristic. In vain will it be said that the law, in giving the name of a piece of 20 francs to a certain weight of gold, has assimilated 29 centigrammes of gold to the franc; to this argument there is a peremptory answer: the law has not said that the franc was 29 centigrammes of gold; it has said, very expressly, that the franc was 4 J grammes of silver, and when it assimilated 29 centigrammes of gold to 4½ grammes of silver, it was in a temporary manner, and this provisional arrangement should cease from the moment that 29 centigrammes of gold ceased to be effectively the equivalent of 4½ grammes of silver. However well disposed we may be, it is impossible that the franc can continue to be 29 centigrammes of gold, after there has been a serious divergence between this weight of gold and 4½grammes of silver; unless we altogether obliterate the general disposition which is at the head of the law of the year 11, and also give a direct denial both to the affirmations relative to what is called a fixed point in the preamble, and to these words of G-audin, that the kilogramme of silver shall always be worth 200 francs, and shall never be worth more or less, and to those of the same minister indicating the obligation we should be under to remelt the gold coins when the relative value of the two metals should be changed; not to mention those of Cretet upon the fixedness of the nominal value of silver, those of Prieur, upon the same subject; and twenty passages from the documents which served as a preparation for the law of the year 11, and which are all explicitly in the same sense.

But, it is said, did not the legislator of the year 11 exceed his powers? What right could he have to chain us to a silver standard, and to decide that the franc should for ever be the weight of 5 grammes of silver, of nine-tenths fineness, or, which comes to the same thing, of 4½ grammes of fine silver? Here there is a distinction to be drawn: if it be meant that at the time when the two metals presented the same fixedness of value, and when there was no reason to believe in the approaching depreciation of the one more than the other, it would have been perfectly legitimate and correct, in the point of view of strict probity, to change the standard, and to invest with that dignity gold instead of silver, then nothing could be advanced more consistent with truth. Only that it would have been very like changing for the sake of change, for it is by no means proved, in the judgment of those who have reflected on these matters, that in a general sense, and taking all the circumstances and qualifications into account, gold may not have better claims than silver to be invested with the functions of the monetary standard. I know more than one good judge who is of an opposite opinion. It would have been possible, in thus changing the monetary unit from silver to gold, to preserve the relation established between this unity and the metrical system: to this end it would have sufficed to have adopted for the monetary unit the gramme of gold, of nine-tenths fineness, or 5 grammes, or even 10 grammes. On these terms, and under these conditions, the change in the standard might have been justified; it would have been effected in the spirit which animated the legislator of the year 11, continuing the most honourable and judicious traditions of the French Eevolution. It would not have contravened the engagements in the preamble of the law of the year 11, which invokes the execution of transactions and the preservation of property. But it would be another thing to alter the standard, and transfer that attribute to gold, at the very moment when it is impaired in value and launched in a movement of depreciation. It were vain to dissimulate, under such circumstances, that the real motive for the change consists precisely in that depreciation in near perspective, by which the State would benefit illegitimately at the expense of its creditors, and which deserves to be severely characterised.

Doubtless, the legislator of the year 11 has bound us, but wherefore? What is the servitude which he has imposed on us; what more than that which all honest people accept, of paying exactly their debts, and of fulfilling faithfully their promises? Yes, thus far, the legislator of the year 11 controlled our liberty; but in so doing he did not exceed his powers. If he did dispose of us, it was by the same right as that by virtue of which he defined all the conservative laws of property. He also disposed of us, and restricted our liberty when he enacted that the State should pay at certain intervals, and without deduction, the interest of the public debt, when he laid down the principle that the State should not deprive the humblest citizen of his field, otherwise than paying him its full value, and until after the expropriation should have been proved by solemn forms to be necessary for the public interest; he disposed of us and fettered our liberties when he inscribed in the code the means of coercing the debtor who, being indebted 100 francs, should pretend to acquit himself by the payment of 50 or 75. Who has ever discovered that when these bonds were forged by the legislator he exceeded his powers? Such a servitude as this, instead of being repudiated by a free people, is the very yoke which they are proud of bearing. Let us mistrust the liberty which would consist in releasing us from the engagement by virtue of which the franc, under present circumstances, ought not to be anything but 5 grammes of nine-tenths fineness, or else the quantity of gold which is freely exchanged in the market for that quantity of silver. In this pretended liberty there is nothing to be seen but false money, and State bankruptcy.

England may be regarded as having effected in 1816 the delicate operation of the alteration of the standard. She then substituted the standard of gold, frankly avowed, for the standard of silver which had been expressly chosen in ancient times, but of which the titles had become somewhat obscured in people's minds, without, however, being quite forgotten. At that time, the men who exercised the greatest influence on the government and on public opinion, allowed themselves to be unduly influenced by the advantage which gold possesses of being more portable than silver. They thought also that gold fulfilled better, or at least less imperfectly than silver, the important condition of fixedness of value. In that, they probably deceived themselves, and if at the present time the most competent judges in such matters in England were consulted, a great number would pronounce themselves in an opposite sense. But it is essential to add that in 1816 there was nothing which warranted the expectation that the relation of gold and silver would be modified. It was still less probable that, if a change did occur, it would consist in a fall in the value of gold. The fact is, that the relation between the two metals underwent in the succeeding years a very slight modification, which was maintained until 1848 or 1849, but it was in the direction of a rise of gold relatively to silver, and not of its depreciation.

It may be here remarked that, at the time in question, England was in a position to make a free choiee on the subject of a monetary system, inasmuch as, for about twenty years previously, she had been under the regime of paper money, owing to the suspension of payments in specie by the Bank, which dated from the month of February, 1797.

It is still more important to observe, if history is, as I believe it to be, warranted in saying that in 1816, England altered the monetary standard and substituted gold for silver, which previous to the period of paper money performed this part, it should also add that the British legislator of 1816 by no means thought that he was performing an act of so wide a bearing, but on the contrary he believed himself to be remaining faithful to ancient traditions. In fact, throughout this affair, parliament followed almost blindly the ideas and opinions which Lord Liverpool had developed in his Treatise on the Coins of the Realm, written in 1805, a work which is a sort of public document, for it appeared in the form of a letter to the king. This statesman, in opposition to other authorities, older and, if I may be allowed to say so, more versed than he in such matters, maintained in his treatise the opinion that silver had for a long time ceased to be the monetary standard in England, and that, consequently, the British legislature was perfectly free to choose between gold and silver.

Whatever may be the case in England, the idea of altering the standard in France, in these later times, finds determined partisans. I regret to have to cite among the writers who have espoused this view, M. E. Levasseur, one of the young men whose career has been marked with great distinction. The sagacity of which he has already given such repeated proofs, in the collection and verification of facts, would not allow M. Levasseur to deceive himself on the real character of the legislation of the year 11. He does not deny that the intention of the legislature at that time was to have one sole standard, and to confer that attribute upon silver. He regrets that in 1848 and 1849, at the origin of the working of the mines of California, a more decided stand was not taken against gold. But in the state to which matters have now arrived, he considers that the simplest and best course is to bow to the authority of what he believes to be accomplished facts, and to consider gold as having taken by main force the place of silver, a place which it must of necessity be left to occupy, without troubling ourselves to inquire whether it has been usurped or not.** In a word, he would here apply the doctrines of the fatalist school, which is so easily resigned to accept that which morality would urge us to reject, under the pretext that destiny has pronounced its judgment. Nevertheless, it does not seem to me that we are yet reduced to quite so much philosophy; it seems to be still possible to keep each in its proper place, to the great honour of principles, and to the great satisfaction of a multitude of respectable interests. There is much silver money still remaining in France, sufficient to compose, with bank notes, and with gold itself, which it is not intended to proscribe, an instrument of exchange quite efficacious, and very firmly established, in conformity with the idea which animated the legislation of the year 11.

There are plenty of selfish interests, plenty of minds which from levity, presumption, or unscrupulousness, are in constant coalition against the right, which is a sufficient motive why those who are guided by reason and tbe public interest, should defend sound principles when they are in danger. One of the titles by which science recommends itself most, is that it keeps constantly unfurled the banner of principle, which it never deserts; and it must not be found sanctioning those infractions and violations of principle to which politicians, for their convenience or repose, or the success of their combinations, are always inclined.

The argument which appears to have seduced M. Levasseur, is that the entire effect to be apprehended from the new mines is already produced, the dreaded perturbation already consummated; to use his own words, if we were to take the necessary steps for maintaining the silver standard, “we should not avert a revolution already effected, but only make a counter-revolution,” M. Levasseur has here fallen into a grave error: we are very far from the time when the full effects of the new gold mines will have been accomplished. It is even remarkable that up to this time the fall in gold, as compared with silver, has been hardly perceptible. In this, the predictions which would have been thought the most justifiable have for the moment failed, and this theory seems to have suffered a defeat; but the circumstances of the case have admitted of explanation.

M. Levasseur's mode of arguing has, if I mistake not, a great defect; it tends, in fact, assuredly against his own intentions, to sanction a practice deserving of condemnation. It would furnish a specious pretext for the successive degradation of the coinage in the following manner: whenever, by the inattention or negligence of the government, the coins in circulation should not have been gradually renewed by recoinage, so as to furnish a circulating medium which had always the full legal weight, it would be possible, by applying the reasoning of M. Levasseur, to pretend that it is warrantable to proceed to a new coinage of lighter pieces, that is to say, by the reproduction not of the primitive type, but only of the mean weight of the pieces in actual circulation. It is not thus that, in the country where the monetary system has preserved the strictest relations with the principles of honesty, statesmen and philosophers have reasoned, men to whose influence is due the testimony of respect for the rights of property and the security of transactions: it is not thus that reasoned, under William III., the illustrious Chancellor of the Exchequer, Montague, and the eminent thinker Locke, in whose footsteps the parliament felt bound in honour to march.

It must be plainly said that the proposal to adopt the gold standard at the present time in France, is opposed to the best established views upon the essence of money. An English writer, whom I have already had occasion to cite, Mr. J. Maclaren, has in a very recent publication maintained, with reason, that gold has to some extent forfeited its claim to the quality of a standard. “The institution of a measure of value, by which the distribution of the property of the society can be regulated, is, confessedly, a necessity in a civilised community; men must have such a measure by which to arrange their transactions. Again, every one would allow that the chief point to be attended to, in the choice of this measure, should be invariabinty; and it would seem to follow, as a matter of course, that when the commodity chosen for this purpose had lost a portion of the quality v, hich originally fitted it for its office, another commodity, if any one could be found, possessing the requisite qualities in a superior degree, should be at once substituted for it before any change in the distribution of the property of the society had taken place; and this seems so plain that it is almost a waste of time to state it,” ** From hence Mr. Maclaren concludes that it is now the duty of parliament to return from a gold to a silver standard. I do not undertake to say that parliament will yield to the suggestions of Mr. Maclaren, though he has furnished very good arguments in their favour; but, assuredly, his reasoning condemns, in toto, the proposition which would at this juncture tend to induce France to adopt a gold in lieu of a silver standard.

In the commission appointed in France in 1857, this proposition had nevertheless an advocate, and it was in the person of one not the least considerable of its members. But the system of this eminent functionary is unsound from its very foundation. In fact, according to him, the law of the year 11, instead of resolving in favour of silver the question of a single standard, would admit the system of a double standard. The sole response to be made to such an assertion is by appealing from the author to himself better informed. It is only necessary to beg him to read attentively the law of the year 11, and if the wording and arrangement of the law leave him in any doubt, to cast an eye upon the expos6 des motifs.

To the preceding considerations, and which appear to me of more than sufficient weight to incline the balance in favour of an immediate intervention of the legislature, with a view of guaranteeing our monetary system from the dangers which menance it (the system as defined and understood by the law of the year 11), other reasons might be added, especially those which appear of a minor order to certain minds who believe themselves more practical and shrewd than their neighbours, because they exclude from their politics all honourable regard for great thoughts and great principles. At the present time there may be observed among the civilised nations a certain movement in favour of the adoption of a uniform system of weights and measures, which would inevitably be the metrical system of France. Several States in both hemispheres have officially given in their adhesion to it; and the idea is gaining ground, noiselessly and slowly it is true, among the great nations of the world, in England, Germany, and the United States. It will, perhaps, be remembered that at the conclusion of the Universal Exposition of 1855, all the commissioners, and all the juries then present in Paris signed a declaration which called the attention of government to the utility and great convenience of a general convention for this object, and an international association was formed for the purpose.** Such innovations as these, if they do not resolve themselves into a profit measurable in shillings and pence, are yet not without their price. It seems also that France, which took the initiative in the metrical system, and which called on all the nations to concur in its adoption, as it was afterwards in the free exercise of her reason and for the common interest adopted by herself, should be the last country from whom should be expected any acts calculated to weaken or thwart the tendency to imitate her example. If so, it is not superfluous to add that in abandoning the silver standard, and substituting one of gold, according to the process recommended,—which would consist in enacting that henceforth the monetary unit should be the twentieth part of the actual pieces of gold of 20 francs,—we should make a breach in the metrical system, we should destroy the prestige which it enjoys among the civilised nations, so as to render impossible its universal adoption, which might otherwise be very probable. In fact, the franc, such as it is at this time, forms an integral part of the metrical system. Until the year 11, inclusive, the legislature of France, of 1789, attached the greatest importance to its remaining so, and its intention has, down to our day, been religiously respected. Now, would not the franc be banished from the metrical system, if it were henceforth understood that the monetary unit is the twentieth part of the quantity of the precious metal contained in the pieces of gold of 20 francs?*

CHAPTER IX.

appreciation of the system which consists in adjourning indefinitely the legislative solution.

I will conclude with a reflection. There are two ways of infringing the prescriptions of the legislator of the year 11, and of drawing upon French society the violations of right, as well as the sufferings and the perturbations of all kinds, of which we have fully sketched the perspective in the course of this work; it may also be said that there are two ways of subjecting the State to those injurious accusations which it would not be easy to refute. The first, more frank or more audacious, would be to lay to-morrow before the legislative body a bill providing that hencefortli silver is deprived of the attribute assigned to it by the legislation of the year 11 (in that respect a faithful interpreter of all the national assemblies which had succeeded since 1789), and that, for the future, gold shall be the standard metal under the conditions which I have just narrated. The other, more timid, would be to remain with our arms crossed, and to leave things to follow indefinitely the course which they have taken for themselves. From that time, our silver money would continue to flow out of the country until the last 5 franc piece had left France. To retain even the smaller pieces it would be necessary to reduce them to the condition of tokens, by withdrawing a part of the fine metal which they contain. The demonetisation of silver would then be an accomplished fact. At whatever point of view I place myself, whether I regard it as a question of interest, of equity, or of honour, I cannot perceive a great difference between the one and the other of these two processes. The effects would be the same, they would be equally disastrous, equally condemnable. On some future day, History, when its pen shall he held by judges firmly devoted to the cause of principle, such as was Tacitus for his time, will visit the one or the other of these projects with its severest condemnation. In many respects omission is almost as culpable as action. This is especially true in relation to that particular social force, the destination of which is to show itself in action, and that force is called the government.

The abatement which has taken place since the commencement of 1858, in the exportation of silver from the French territory, is a fortunate circumstance, inasmuch as it renders more practicable the conservation of the monetary regime prescribed by the law of the year 11; so far we have reason to congratulate ourselves. This must not, however, be made an excuse for inactivity, or for an indefinite temporisation. The current which drew the silver from within our frontiers has not ceased to exist, and nothing indicates that it is likely to cease. On the contrary, it is probable that it will recommence with great vivacity. Let the event then only be taken for what it really isj a respite given to the authorities of France to enable them to act. It would be, perhaps, better to say that it is a pause on the part of the sole authority to which governments own themselves amenable, Divine Providence, to enable every one do to his duty.

[*]These considerations, among others, are presented with great force by Mr. James Maclaren, in the work which I have already cited.

[*]I remember that a change of one and a half per cent. in favour of gold, about 30 or 40 years ago, caused it to disappear entirely from commercial payments.

[*]See Section IV., Chapter III., for what passed on the occasion in the two legislative councils.

[*]The cost would be 6 francs, 70 centimes (7s. 11d.) for a kilogramme of coined gold, that is of the fineness of nine-tenths, making at present 3,100 francs (£129. 3s.) For 325,000 kilogrammes of gold, which would make more than a milliard (£40,000,000), it would be 2,177,300 francs; thus for 2 milliards it would be a little more than 4 millions (£160,000).

[*]In reality, the directors of the mints come to an agreement with the capitalists who carry on the commerce of the precious metals, and their real benefit consists in the profits inherent in this commerce.

[*]When these gold pieces were demonetised, only 11,987,300 francs (£479,692) were presented for payment.

[†]It appears from the published account of the National Bank that its loss by this transaction amounted to 140,032 francs, 67 centimes (£5,601). It found a compensation in the use of the funds which the treasury had left in its charge.

[‡]It is curious that less than a third should hare been presented for reimbursement, exactly 49,790,970 florins. On this subject, however, it must be borne in mind, that of the sum of about 173 millions of florins which had been coined, 96,490,590 had been struck in Brussels.

[*]The article 11 of the fundamental law on the currency of Holland, of the 28th September, 1816, runs thus:—” The coins for the convenience of commerce shall only be fabricated for the account of individuals. The pieces of 1 florin and of 3 florins may also be fabricated on account of individuals; but the pieces of gold of 10 florins, the pieces of fractional parts of the florin, and coins of copper, shall not, absolutely, be fabricated for the account of individuals, but only for the account and by order of the government,” Later, when it was decided to coin pieces of gold of 5 florins, they were subjected to the same regime as those of 10.

[†]In Belgium, where, in consequence of the new legislation on the curency, the phenomenon of the variations of value between the two metals is more apparent than with us, the 20 franc gold pieces have never lost much, in comparison with silver; at the outside ½ per cent: they are received at par in the hotels, and in the large shops. It is probable, however, that if France abolished the legal relation of 1 to 15½ between the two precious metals, the fall in gold would be more decided, because France now plays the part, at her own expense, as I have already shown, of a parachute for gold. So long as she offers to the bullion merchants a market where they can barter their gold for silver on the footing of 1 against 15½, the value of gold in its relation to silver cannot, in Europe, deviate much from this relation. The deviation will only become more decided from the moment when France shall have been exhausted of her silver, unless she shall have previously renounced that fixation, henceforth arbitrary.

[*]I have already remarked above that the fact resulted from the very context of the law.

[*]This description is extracted from the Eeonomiste Belge, of the 10th February, 1857, where M. de Molinari has developed his idea.

[*]The following was the programme:

1st Question.—What is, in fact, the importance of the exportation of silver?

2nd Question.—To what cause, direct or indirect, must this fact be attributed?

The premium of silver over gold. Its degree, its variability.

The natural movement of our international commerce with the countries which prefer silver.

Private and direct speculation of the money-changers and refiners.

What part belongs to each of these causes?

3rd Question.—What may be, in a general point of view, the influence for good or evil of the destruction or the exportation of the silver currency?

What good can arise beyond the private benefit which may be derived by the money-changers and refiners?

What harm can ensue:

To the Bank, and in consequence to commerce, by the weakening of the reserves of specie?

To the State, in obliging it to interfere at its cost, to replace constantly with new coins those which the refiners had melted?

To commerce, in depriving it, as might happen very speedily, of a description of money which is very necessary to it in its relations with other countries; or in compelling it to pay for it the premium which the money-changers shall have gained?

4th Question.—In face of the fact and its consequences, is there nothing for the government to do?

If so, what steps ought it to take?

Many have been suggested:

• 1. To demonetise gold, and bring it to the state of simple merchandise, excepting the fixing officially its value at periodical epochs;
• 2. To transform silver money into a conventional currency, by giving it a nominal value, superior to its real value, as in England;
• 3. To transform the silver money, by giving it a nominal value, equal to its actual real value, that is, by changing the relation established by law between gold and silver;
• 4. To prohibit the exportation of silver;
• 5. To raise the duty on the export of silver;
• 6. To lower the recognised weight and fineness;
• 7. To attack directly the evil in its material and immediate source by a law against the destruction of money, assuming that the ancient laws are no longer in force; and with this view to prohibit the selecting and purchasing of coins at a premium for the purpose of melting.

It will be well for the commission to examine successively these different questions, without prejudice to those which may arise out of the inquiry.

To make a subsidiary inquiry whether the State ought not to reserve to itself the exclusive right of withdrawing from the circulation the coins bearing the inscription of Charles X., and of Napoleon I., which contain a quantity of gold, the melting of which constitutes the chief benefit to the refiners. What measures should be taken to carry out this object? 12

[*]Newton says that I pound, troy weight, of fine gold is worth legally 15 pounds, 6 ounces, 17 dwts., and 5 grains of silver. The pound troy is-only 12 ounces.

[*]Newton saya 14 4/5 to 15.

[†]This report of Newton has been reprinted in a volume of documents upon the currency, which has been published by the London Political Economy Club, to which I hare previously referred.—Select Tracts on Money, p. 274.

[*]The reduction of six pennyweights per guinea was made before the and even of the year 1717, by royal proclamation.

[*]In one of the works which were published by the members of the Academy of Moral and Political Sciences, in 1848, during the commotion caused by the Revolution of the 24th February, M. Troplong brought out conspicuously the communistic character of the opinions of Louis XTV. on property, and the contrast which they present to the ideas which formed the basis of the Code Napoleon. On this subject the writings themselves of Louis XIV. may be consulted. Some very significant extracts will be found in M. Henry Martin's History of France, VoL XIII., p. 259, edition of 1858.

[*]The administration, however, refused to embark in the undertaking, when advantageous proposals were addressed to it, for taking the place of the private refiners, and refining the 5 franc pieces paid in for taxes. These proposals were made several years previously.

[*]The views of M. Levasseur are given in a very interesting volume, entitled, Question de l'Or; Book IT., Chap. IX.

[*]" A Sketch of the History of the Currency,” comprising a brief reTiow of the opinions of the most eminent writers on this subject, page 358.

[*]The most remarkable manifestation which resulted from this fact has emanated from the English committee, which formed part of the International Association. In a series of publications, this committee, after having maturely considered the subject, has declared that a decimal system of weights and measures, Of which the units shall be allied to each other by decimal relations, is for the interest of the public, and that the best basis to give to the whole-system is the metre, such as was determined by the International Commission under the French Republic. I wish to draw the attention of enlightened men to the last of these publications, entitled, What is the best Unit of Length? It is from the pen of Mr. James Tates, one of the vice-presidents of the International Association, and one of the men who in the two hemispheres have devoted most labour to the task of spreading the fruitful idea of a uniform system of weights and measures for the whole civilised world.

[*]Instead of weighing exactly 5 grammes, the franc would have a weight represented by an indefinite fractional number (0 gramme 32258, &c.) 14