The Online Library of Liberty

A project of Liberty Fund, Inc.

• Banking In the Latin Nations.
• Part I.: Banking In France.
• Chapter I.: Its Status Before the Revolution.
• Chapter II.: The Bank and “system” of Law.
• Chapter III.: The Discount Bank—la Caisse D’escompte.
• Chapter IV.: Assignats—the Basis of Their Issue.
• Chapter V.: The Bank of France.
• Chapter VI.: Banks and Bankers After the Revolution.
• Chapter VII.: Banking In the French Colonies.
• Part II.: Banking In Italy.
• Chapter I.: Primitive Banks.
• Chapter II.: Banking Under the Unification of the Kingdom.
• Chapter III.: Italian Co-operative Banks.
• Chapter IV.: The Bankers of Florence.
• Chapter V.: Banks and Bankers In Sicily.
• Part III.: Banking In Spain.
• Chapter I.: The Earliest Banks.
• Chapter II.: The Bank of Spain.
• Part IV.: Banking In Belgium.
• Part V.: Banking In Switzerland.
• Part VI.: Banking In Portugal, 1750 to 1891.
• Chapter I.: The First Great Banks.
• Chapter II.: The Bank of Portugal.
• Part VII.: National Bank of Roumania.
• Part VIII.: The Latin Monetary Union.
• Part IX.: Dynamics of Circulation.
• Part X.: The Banks of Alsace-lorraine After the Annexation. *
• Banking In Canada.
• Author’s Preface.
• Chapter I.: Currency Expedients.
• Chapter II.: 1817-1841. Banking Under Joint-stock Charters.
• Chapter III.: 1841-1867. Banking In Old Canada.
• Chapter IV.: Banking Under the Dominion.
• Chapter V.: Scope of Existing Laws.
• Chapter VI.: Land Banks—loan Companies.

PART VIII.

THE LATIN MONETARY UNION.

CONVENTION OF DECEMBER 23, 1865.

THE Monetary Union which since 1865 has bound France to Belgium, Switzerland, Italy, and Greece, is of such comprehensive importance in its bearings upon the coin and auxiliary circulations of the allied countries, that we deem it essential to present a brief review of its history.

The law of the 7th Germinal, Year XI, which established the French monetary system, provided that “Five grammes of silver of a standard fineness of 9/10 shall constitute the monetary unit, designated by the name franc.” Articles 6, 7, and 8 added: “Gold pieces of 20 and 40 francs shall be struck. Their standard is fixed at 9/10 fine and 1/10 alloy. The pieces of 20 francs shall be 155 to the kilogramme and those of 40 francs 77½ to the kilogramme.” According to these provisions, gold of equal weight and standard is considered to be worth 15½ times as much as silver. This was the ratio fixed by royal decree of October 30, 1785.

The simplicity and admirable convenience of the French monetary system, with its great advantage of a decimal basis, procured for it adoption by Belgium on June 5, 1832, Switzerland May 7, 1850, and Italy August 24, 1862. In consequence of this identity of system, the moneys of each of the four countries circulated freely in the others, and thus a kind of monetary union was improvised without formal understanding. But in 1850, as a result of the discovery of gold deposits in California and Australia, the monetary circulation of Europe was profoundly disturbed. Whereas gold was abundant and commonly used even for payments of slight importance, silver, whose production had remained stationary, rose in value. The ratio between gold and silver, which during the ten years 1841-50 had averaged 1 to 15.83½, declined in the fifteen succeeding years, falling below 15.5 from 1852 to 1861, the lowest point, 15.21, being reached in 1859. The average ratio of gold and silver during that period was 15.37. The relative increase in the value of silver, amounting to 0.846 per cent., was sufficient to attract speculators, who, by continuous manipulations with large quantities of metal, gained tempting profits. At the very start, the money-changers drained the market of five-franc silver pieces, which disappeared from circulation. The fractional coins were melted, and France suffered from a genuine silver money famine, affecting the supply both of five-franc pieces and subsidiary coins. Among the varied devices suggested for putting an end to the dearth of fractional money, one was seized upon that had eminently the characteristics of an expedient. The intrinsic value was reduced to do away with the profits obtained from melting. Switzerland, by a Federal Act of 1860, lowered the standard of the silver franc and its multiples up to five francs, and of its fractions, to 8/10 fine, so that the franc coin was worth only 0.889 franc. Italy, adopting the French system in 1862, struck coins in denominations below five francs at a standard of 0.835, which gave the franc an intrinsic worth of 0.928 franc. In France, a law was enacted May 24, 1864, on the model of the Italian measure, adopting the standard of 0.835 for the twenty and fifty centime pieces, but maintaining the 0.9 standard for higher denominations. Belgium made no change in her coinage. These measures, taken without any previous agreement, altered the conditions of the monetary interchange of four nations and opened a new field for speculation. Swiss pieces were exchanged for Belgian, and the latter were brought to Switzerland for recoinage at a reduced standard.

PROPOSALS FOR A CONFERENCE.

Belgium, taking alarm at these abuses, made overtures to the French Government with a view to a conference in Paris, at which Switzerland and Italy should also be represented, and which should have for its object to establish a uniform system for the coinage and circulation of fractional moneys in the four countries. It was further proposed that the conference should have full liberty of action, and might either confine its work to a consideration of monetary regulations for the four States concerned, or extend its scope by laying the foundations of a uniform monetary circulation for the whole of Europe.

The conference proposition was approved by Switzerland and Italy, and the International Commission began its deliberations in Paris November 20, 1865, under the presidency of M. de Parien. As a basis for its work, certain questions were drawn up under nine heads, as follows:

From the beginning, the expediency of a monetary union of the four countries was recognized and resolved upon. In connection with this decision, it was agreed to have uniformity of standard for all fractional silver coins, with a maximum of circulation for such coins to correspond to the population of each country—their intrinsic value being less than their face value. It was also decided that the coins of the contracting States should be receivable in the public offices of each, and this provision was extended to include the gold coins struck on the basis of the Act of the year XI. The ninth question was determined in the negative, notwithstanding the strenuous effort made by M. Kreglinger, the Belgian delegate, to inaugurate the principle of the single gold standard by reducing the standard of the five-franc silver piece to 0.835; which would have been equivalent to placing it in the same category with fractional money.

The question of fixing the standard of fractional coins raised serious difficulties. The different rates suggested were 0.800, 0.835, and 0.850. From the minter’s point of view, the higher the standard the better and more durable the coin—and on that score it would have been in order to select the 0.850 standard. But in practice this contention could not sustain the tests to which it was subjected. Switzerland had given preference to the 0.800 standard, Italy to the 0.835 (which was adopted also by France for the twenty and fifty centime pieces), and Belgium alone had held to the 0.900. The representatives of Switzerland energetically insisted upon the 0.800 standard, maintaining that it was more in keeping with the decimal system and would operate more effectively than the 0.835 standard to protect the fractional coins from remelting and exportation. The discussion was carried on principally between the Swiss and the Italian delegates, the latter being discreetly supported by France. If the Swiss standard had been assented to, Italy would have been obliged to convert 100,000,000 francs, and France 16,000,000 francs, while Switzerland’s total would have been but 10,000,000 francs.

AN AGREEMENT REACHED.

After a protracted debate, in which Belgium declared for the standard already established in France and Italy, Switzerland consented to the 0.835 standard. However, the period fixed by the conference for the withdrawal of coins that had been issued by the various countries under conditions other than those provided for, which was to expire on January 1, 1868, was extended in the case of Switzerland until January 1, 1879. After this obstacle had been got over, all parties being in hearty sympathy with the project for a monetary union, the other matters at issue were not such as to cause any decided conflict of opinion. At the meeting of December 21, 1865, the conference adopted the fifteen articles of the famous agreement consolidating Belgium, France, Italy, and Switzerland in a monetary union. The following is a summary of that agreement:

The four contracting States were to issue coins of the same weight, standard, and diameter. The percentage of allowable loss of weight by use was to be uniform in all the States. The standard for the five-franc silver piece was to be 900/1000 fine, and for the pieces below five francs 835/1000 fine. The coins struck by each of the contracting States were to be accepted in the public offices of all, under these conditions: The five-franc pieces without restriction, and the fractional coins up to 100 francs, provided that coins which had been reduced in weight by use one per cent. below the legal limit, or whose effigies have been effaced, might be excluded. In the latter case, if their weight has been reduced by use five per cent. below the legal limit, they were to be restruck by the Government that issued them.

Each of the contracting governments engaged to accept from individuals or from the public offices of the other States the fractional silver coin that it had issued, and to exchange it for an equal value of current money (gold pieces or five-franc silver pieces), provided the sum presented for exchange should not be less than 100 francs. The quantity of fractional money to be issued was fixed at six francs per head of the population. The year of coinage was to be stamped upon the gold and silver pieces of each State. The same agreement conceded the privilege of joining in the compact to other countries adopting the Union’s monetary system, and named January 1, 1880, as the date of expiration of the compact; with a tacit extension fifteen years longer, unless notice of withdrawal should be given at least a year before the specified date of expiration.

DEFECTS OF THE SYSTEM.

These were the broad provisions of the Convention of December 23, 1865. A brief experience made its imperfections and deficiencies felt. Although it will always be a somewhat vexatious thing to have the seigniorage privileges subject to the consent of foreign nations, and to be held to accountability for the home coinage, the Monetary Union is easily defensible on both expedient and substantial grounds. But consequences had to be faced for which no provision was made. With perfect propriety, the most minute details of the fractional money were considered and regulated, because such money is, in truth, of the fiat variety. On the other hand, it was not foreseen that the money market, which in 1865 was favorable to silver, might change and favor gold; and that, in such not improbable contingency, a grave problem would arise respecting the final settlement of the 5-franc pieces, a problem which, indeed, would be much more serious than that of the subsidiary coins. It was, moreover, not taken into account that particular States might throw into forced circulation unlimited quantities of small coins not coming within the range of the Latin Union, and therefore not legitimately current outside the countries issuing them. These various questions, which should have been carefully weighed by the Conference of 1865, were neglected, and the solution of them was left to the course of events.

Several countries that were expected to join the Union entertained misgivings and were slow to decide. Austria, in 1867, seriously contemplated giving in her adhesion, but, finally, only Greece and the Papal States came over. By a law enacted August 10, 1867, Greece adopted the French monetary system, and, profiting by the privilege vouchsafed by Article 12 of the convention, on November 18, 1868, she signified her desire for membership in the Latin Union, which was accorded to her by the associated governments without any dissent.

MONEYS OF THE PAPAL STATES.

The Papal Government had watched with interest the proceedings of the Paris Conference, and, from the first, had manifested a disposition to become a participant in the Union. A decree issued June 18, 1866, instituted a reform in the coinage system of the Papal States, establishing the French system, but providing for 2½-franc and 25-centime silver coins, and a 2½-centime copper coin. It is proper to add, however, that the Papal gold and silver pieces corresponding to the French were of the same weight, standard, and diameter, and that, on such grounds, the most to be said unfavorably was that they were often beneath the correct standard. But that was a matter of small importance, and when they were subsequently thrown out of the French circulation, it was for reasons quite apart from those of mintage. The “Moniteur” of February 12, 1867, announced that the Papal Government had just given its indorsement to the Convention of December 23, 1865, and that by virtue of this action a uniformity of gold and silver moneys had been established between the Papal States and the Kingdom of Italy. But two essential requirements had to be conformed to by governments applying for admission into the Union: 1, That the coinage should have full weight and exact standard; 2, that the provision restricting the coinage to the 0.835 standard on the basis of population should be rigidly observed. As we have stated, the first condition was complied with. The Papal coins were worth neither more nor less than the French of the same denominations. The existence of 2½-franc, 25-centime, and 2½-centime pieces was regrettable. The Papal Government retained them on traditional grounds, the 2½-franc piece corresponding to the old écu or half-dollar and the 25-centime coin to the former grosso, or half-paul; but, upon their suppression, the adjustment of matters became easy, as the Holy See showed a conciliatory spirit.

While the negotiations were in progress, at the time of the return of a part of the French troops from Rome, the fractional money of the Papal States found its way in considerable quantities into the south of France. The Treasury officials had been instructed, by a notice inserted in the “Moniteur” of October 4, 1868, to lend their assistance for its circulation; but the Bank of France, not being authorized by any legislation to accept these coins, at first rejected them. This occasioned some trouble and numerous recriminations. Later, on strength of the assurance that the entrance of the Papal States into the Monetary Union was probable, the Bank relaxed its severity and consented to receive the Papal moneys on condition that they should be presented in payment only in small amounts. Thus it became of urgency to reach a decision upon the advisability of receiving the Papal States into the Latin Union. In order to determine that question, it was needful to know how much fractional money had been coined bearing the effigy of the Holy Father. The aggregate was found to be 26,000,000 francs, whereas only four or five millions was allowable under the proviso that the circulation should not exceed six francs per inhabitant. This overabundance of fractional coins was due in part to the peculiar economic conditions prevailing in Rome, which, as a place of pilgrimage, received a very great deal of money of the various denominations below five francs. But it was still more a consequence of the policy of the Sovereign Pontiff, who had steadfastly abstained from all acts that would imply in any manner a recognition of Italy’s absorption of a portion of the Roman States, and who deemed that it would be equivalent to such a recognition of the accomplished fact if the fractional money in circulation should be regulated proportionately to the number of subjects over whom he actually ruled. Under these circumstances, the French Government could not refuse the Papal coins the right of circulation.

The Chamber of Deputies took up the subject on February 5, 1870, the discussion being brought on by a question addressed by M. de Kératry to Count Daru, Minister of Foreign Affairs. M. de Kératry showed himself to be poorly informed, mentioning 0.735 as the Papal standard and 0.840 as the French. The reply of the Minister of Foreign Affairs was likewise somewhat astray; for it did not state the whole truth, and it encouraged credence of the old legend about the debasement of Papal money. Nevertheless, the facts were well reviewed. “The plain truth is,” said the Minister, “that there is no monetary convention which binds us to the Papal States. We have monetary agreements with Belgium, Switzerland, and Italy, but the Pontifical Government has decided that it cannot bind itself by a convention. His Excellency, Cardinal Antonelli, has stated in a memorandum, dated December 12, 1868, that he could not accept the terms of the Monetary Union. Notwithstanding this, Roman money has been circulating in France for several years, notably in Lyons, by sufferance of the Government. That sufferance must have an end. I have had the honor to notify the Government of the Holy Father, in a dispatch of the 27th of January last, that in my opinion the French Treasury cannot, without serious disadvantage, continue to concede to the Roman coins the circulating privileges hitherto enjoyed. Measures to correct the evil have been taken during the past fortnight.”

As a consequence of these explanations the Bank of France, which had already ordered several of its branches to refuse Papal coins, issued like instructions to its other offices without exception. Soon afterward, M. Buffet, Minister of Finance, instructed all persons connected with his department to reject them. These steps affected numerous interests. The circulation of the Papal coins had been rather widespread, especially in the southern cities. The press took up the question, and an active controversy was waged. One of the Deputies, M. Vendre, as the champion of those aggrieved, interpellated the Minister of Finance on February 25, 1870. M. Vendre took the ground that as the Government had tolerated and even promoted the circulation of the Roman coins, and as the public officials had used them for payments, the State should bear the responsibility for its acts, and indemnify individuals for the losses resulting from the elimination of these moneys. M. Buffet, the Minister of Finance, replied under some embarrassment. He pleaded extenuating circumstances for his predecessors, who, with a weakness that bordered on gross culpability, had permitted the introduction into France of the coins of a Government which had not fulfilled the conditions necessary for membership in the Union. M. Magnin, a Deputy, proposed that the holders of the coins be granted time to exchange them at their face value, or in approximation to it. The Minister of Finance declined to make such a concession, as he did not feel justified in inflicting the loss upon the Treasury.

On February 27th, a circular was published in the “Journel Officiel” stating that while the public offices were closed against the Papal moneys, there was nothing to prevent the officials from rendering their holders such services as might contribute to the disposition of them at the least possible loss; and consequently that all receivers and collectors would take the Papal pieces at the rate of ninety-one centimes paid immediately. This loss of nine per cent., the reasons for which the public could not understand, caused a merited discontent, and provoked slanderous accusations against the Papal Government. To put a stop to such reproaches, certain persons devoted to the Holy See and several bishops opened offices at which Roman coins were redeemed at par; but as speculators took advantage of the opportunity thus presented, they had to be suppressed, and the coins which the Papal authorities were unable to take up remained floating in France.

After the war, during the financial crisis of 1871, the Roman pieces rendered some service to France. By the middle of September, 1871, five-franc coins and fractional pieces had become so scarce that the public was greatly embarrassed for money to pay workmen and to transact the small business of daily consumption. Thereupon the Bank of France, which had collected about 1,900,000 francs of Roman money, decided to put it to use, and placed it in circulation under a formal agreement, made public November 1, 1871, to take back these coins the same as French in all affairs of payment and exchange. But the temporal power of the Pope was now at an end. Italy, which had seized the residue of the States of the Church, naturally became responsible for the Papal coinages. By a decree promulgated February 18, 1872, the Italian Government announced that after March 16, 1872, Papal money would cease to be current in the Province of Rome, and that after April 30, 1872, it would no longer be accepted at the public offices or by individuals. The period specified was too brief to permit France, compelled, as she was at the time, to utilize the Papal pieces, to profit by the privilege of exchange, and she had to keep them. At the Conference of 1885, the French delegates showed that France had on hand about 10,000,000 francs of the Papal money that had passed out of circulation, and obtained for the French Government authority, as an exceptional matter, to recoin them up to 8,000,000 francs. Thus ended the episode of the Papal moneys.

THE DECLINE OF SILVER.

The whole policy of the Second Empire displayed a tendency toward groupings of nationalities and the formation of a sort of European confederation. The Latin Union seemed to be a first step in that direction, and the next question opened up was whether the system adopted by the four countries might not be extended to embrace all Europe. The Exposition of 1867 appeared to offer a favorable opportunity. At the instance of the French Government, an international conference was held, at which eighteen nations were represented. It had its sessions in Paris from June 17 to July 6, 1867. As had been done in 1865, a list of questions was made up, which were brought forward successively for discussion. Nothing practical came of this conference so far as the Latin countries were concerned, but useful hints of the inclinations of the different powers were obtained. Mr. Meinecke, the Prussian delegate, signified his preference for the single gold standard, and the conference, with but one dissenting vote—that of the delegate of the Netherlands—expressed itself affirmatively upon the following question: “Is there a possibility to attain this end (uniformity in coinages) upon the basis and with the condition of the adoption of the exclusive gold standard, leaving to each country liberty to retain temporarily the silver standard?” Indeed, from the opening of the conference, it was evident that there was little prospect for gaining adherents for the system of the Latin Union, whose essential feature was the simultaneous use of gold and silver. This indication was not permitted to go unheeded; for the conclusions arrived at by the Conference of 1867 led Prince Bismarck, promptly after the war of 1870, to substitute in Germany the single gold standard for the old silver standard. This was to have consequences for the Latin Union that will now be examined.

The war was scarcely concluded when the new German Empire instituted a uniform gold money for all the German States. We translate the principal provisions of the law of December 4, 1871, establishing the new monetary system: “The gold money of the Empire shall be struck at the rate of 139½ pieces to each pound of gold fine. The tenth part of this gold piece shall be called mark, subdivided into 100 pfennings. The alloy of the gold money is fixed at 100/1000 copper to 900/1000 gold.” This law was in keeping with the spirit of the Conference of 1867. The moneys provided for were on the decimal basis, like French money, but the values of the ten and twenty mark pieces did not vary much from those of the corresponding coins of England and the United States. Thus:

This circumstance of the approximate equivalency of German moneys with English and American, is the practical application of Question 6, submitted to the Conference of 1867, and decided in the affirmative almost unanimously: “Would it be possible and useful to establish uniform or partially coinciding coinages on the basis of gold moneys?”

The twenty-mark piece was also a development of the Conference of 1867, which had highly extolled the twenty-five-franc piece. Besides gold coins, silver moneys were needed. The law of July 9, 1873, made provision for them by ordering the coinage of five-mark, two-mark, one-mark, fifty-pfenning, and twenty-pfenning pieces, on the 0.900 standard. But while creating the indispensable silver coinage, the law reaffirmed the principle of the single gold standard. Article 9 contained the following: “No one is bound to accept more than twenty marks in Imperial silver coin.” This restriction did not apply to the public offices, which were obliged to receive silver money to any amount. The silver coinage was limited to ten marks per head.

THE SCANDINAVIAN UNION.

Germany was soon followed by the Scandinavian countries—Denmark, Sweden, and Norway—which also profited by the decisions of the Conference of 1867. In the month of September, 1869, pursuant to a vote of the Swedish Diet, a special commission had been appointed to inquire into the monetary question. The Diet had indicated the single gold standard as the basis for the future system, and had manifested a desire to bring about a monetary agreement with other nations as far as possible. The commission presented its report on August 13, 1870. It recommended adopting the gold franc as a unit, on the standard of 0.900. Its proposals were without definite issue. But on December 18, 1872, Sweden and Denmark entered into an agreement to arrange the conditions of a monetary union. Both countries chose gold as the standard of their common system, silver and the baser metals to serve for fractional purposes. The standard of the new gold coinage was fixed at nine-tenths fine. The unit, called the krona, is a coin represented by its ten-fold and twenty-fold values, which are worth respectively 13.89 francs and 27.78 francs. This agreement took effect May 27, 1873. Norway, which naturally should have been associated with Sweden and Denmark from the outset, hesitated for some time. However, having on June 4, 1873, fully introduced the Swedish system, she reconsidered her attitude, and on March 4, 1875, joined the union already formed by Sweden and Denmark, which became the Scandinavian Union.

Since 1873, Holland had seriously taken up the coinage question, manifesting a preference for the gold standard, which she accordingly adopted on June 6, 1875. The decimal basis was provided for the new system, but the values of the coins did not correspond closely to those of the French. The ten-florin (gilder) piece is worth 20.83 francs.

THE GROWING OVER-SUPPLY OF SILVER.

All these transformations were not accomplished without some trouble. Silver, being discriminated against, glutted all markets and depreciated in value. The following figures for Germany will give an idea of the quantities of silver thrown on the market by the monetary reform in Germany alone. In 1880, after 382,501,311 marks had been struck (equal to 458,488,000 francs), Germany had sold 567,139,993 marks of silver (623,853,992 francs), retaining a remnant of 339,353 pounds of fine silver, which she could not put to use in coinage (International Conference of 1881). The effect of these demonetizations was reinforced by a considerable increase in the output of the mines. According to the “Report of the Select Committee on the Depreciation of Silver” submitted in 1876 by Mr. Goschen (p. 5), the estimated annual production of silver from 1852 to 1862 averaged eight to nine millions of pounds sterling, being:

From 1868 to 1870, the totals were a little lower, but after 1870 they rose again, being:

Of course, the above statistics are only approximate, but they illustrate the growing ratio of increase in production. A third very effective cause for the plethora of this metal was the diminution of India’s demand. In 1865-66 India’s net imports of silver aggregated £18,170,000, but after 1870 the excess of imports over exports was on a much smaller scale, being:

Meantime China and the other far Eastern countries did not take quantities to at all compensate for the excessive production. Thus three agencies worked together for depressing the price of silver; the change in the monetary systems of Germany, the Netherlands, and the Scandinavian nations, the increase in the output of the mines, and the decrease in the Asiatic demand. Moreover, the price of silver on the London market, which should have stood at 60⅛d. per ounce if the 15½ ratio is correct, took this downward course:

With the right of unlimited coinage allowed to the contracting States, the Latin Union served to drain off the larger part of the surplus silver. As the average intrinsic ratio of gold and silver rose from 15.64 in 1872 to 15.93 in 1873, this left, notwithstanding the loss of interest on mint vouchers, a sufficient margin for speculation, since the piece that circulated for five francs was worth barely 4.85 francs at the rate of the day. The coinage of 5-franc pieces took great strides. In 1873 there were coined—

This aggregate of 308,627,775 francs represents the coinages of only three governments, Switzerland having for a long time abstained from minting. The over-supply of the depreciated money alarmed the public. The Bank of France rejected Belgian and Italian five-franc coins, as it had the right to do. The Chambers of Commerce, particularly those of Antwerp and Lyons, gave decided expression to their solicitude, and demanded that the gold standard be adopted. To soothe these apprehensions, the French and Belgian Ministries caused a slackening in the coinage of five-franc pieces, but more energetic measures were needful. M. Malou, Belgian Minister of Finance, took the initiative. On November 11, 1873, he presented the draft of a law authorizing the Government to limit or suspend the minting of five-franc pieces until July 1, 1875. Among the reasons given by the Minister for this step, the following explanation is significant:

“While permitting nothing to prejudice my mind as to principles, it appeared to me that, pending the meeting of the Chambers, my duty was to exercise the hitherto undisputed powers granted by existing laws in order to better preserve the Legislature’s liberty of action and to indicate, though in a manner somewhat inconclusive, Belgium’s good faith in issuing coins, which, in the event of their withdrawal, she would recognize or replace.” This view, admitting the responsibility of the issuing State, is contrary to the one since maintained by M. Pirmez. After a prolonged discussion, the act suspending the coinage of silver was passed (December 18, 1873). The measure was good, but not adequate; for the money allies of Belgium and France could have made it of no avail by simply increasing their coinage and introducing the product of their mints into the two countries, which latter might have been done with perfect ease, exchange being nearly always against Italy and Greece. The danger could be dealt with only by an international agreement.

AGREEMENT OF JANUARY 31, 1874.

Switzerland, although less interested than any of the other countries, proposed a call for a new monetary conference. France gave her approval immediately to the Helvetian proposal, which was in the behalf of her own menaced interests, and invited the allied governments to appoint representatives. The conference assembled in Paris on January 8, 1874, M. Dumas presiding. The views of the four governments were successively brought under consideration. The French Government, through M. Dutilleaux, Director of the Circulation Department of the Mint,* informed the conference that, in order to check the movement of silver into the monetary establishments of Paris and Bordeaux, the daily minting of the white metal had been limited, first, to 280,000 francs, and then to 150,000 francs. M. Dutilleaux added that this precaution would have been sufficient if France had not been tied by reciprocal engagements to the other States of the Union, whose five-franc pieces flowed steadily into the public offices; and that the limit placed on the coinage of silver did not imply on the part of France either a change in the monetary system, or even a tendency toward any modification whatever. Belgium went farther. Her delegate, M. Jacobs, gave it as his opinion that each government should pledge itself for a certain period to cease the minting of five-franc pieces, or else specify a maximum figure. He urged, with good reason, that this would be the most practicable way to prevent the States of the Union from being used as the outlet for the depreciated bullion and demonetized silver coins of Germany, Holland, and the Scandinavian countries. Italy, whose coin had been rejected by the Bank of France, declared that she did not object on principle to a temporary restriction of silver coinage, but complained of the French refusal of Italian pieces, whereas French pieces enjoyed legal circulation in Italy, and claimed that the action of France was contrary to the spirit of reciprocity. M. Lardy, the Swiss representative, made a masterly argument, and demanded that an investigation be undertaken which should go deeper into the causes of the depression of silver. He was at no pains to much disguise his wish for a consideration, and perhaps an introduction, of the single gold standard. A series of questions was propounded to guide the conference in its deliberations, as had been done on the previous occasions. Omitting those adapted only to excite academic discussion, and others that were thrown out peremptorily by the French delegates, these were principally considered: “Is it possible, by limiting or suspending for a certain time the coinage of five-franc pieces, to find remedies for the embarrassment occasioned by the decline in the value of silver? Is it necessary to institute general legal tender for the current coins of the four countries, in addition to the existing legal tender, so far as the public offices are concerned?” The solution of these two problems was the whole purpose of the conference, and sentiment as to the former had already been strongly prejudiced by the attitude of France and Belgium.

Various opinions were advanced concerning methods for counteracting the injurious depreciation of silver. The most radical was the single gold standard policy, which was consistently advocated by the Swiss delegation. But although some of the French representatives were quite disposed to side with the Swiss, they were unable to entertain any discussion on that subject, since their instructions formally excluded it. M. Dumas, president of the conference, summed up matters as follows:

“The programme that apparently would have the best chance of acceptance, would be to create a fourth variety of legal money. Aside from the gold coins that are abundantly provided to meet the requirements of commerce, the fractional money struck by the four countries in limited quantities, and at an inferior standard and that circulates among them in common, and the copper coins issued by each country for its own home needs, silver coins of a uniform standard of 0.900 might be minted, which, instead of being abandoned to the speculations of trade, would depend upon the will of the governments themselves, like the old coinages that were made in the name of the Sovereign under special laws.”

After these plans had been discussed, it remained to determine the coinage allowances of the various States. It was the general sense of the conference that the total of the new coinage, for the year 1874, should not be in excess of 60,000,000 francs, to be apportioned among the four countries. But Italy raised objections which may be summarized as follows: (1) The Bank of Italy, which holds the monopoly of coinage, has in its vaults 60,000,000 francs in bullion. This metal must be converted into coin, but it was not intended for circulation. The coinage of that silver must not be subjected to the restrictions which will be fixed for the coinage of silver brought to the mint by individuals. (2) The restrictions for silver coinage should not be made to apply to the old Italian coins not on the decimal basis. These coins still (1874) amount to 50,000,000 francs, of which about 18,000,000 are to be reminted during the year. The apportionment, according to population, of the 60,000,000 francs agreed upon for 1874, gave to France 30,000,000 francs, to Italy 20,000,000 francs, to Belgium, 5,000,000 francs, and to Switzerland 3,000,000 francs. Adding mint vouchers to fall due in 1874, and the 60,000,000 francs to be coined for the account of the Bank of Italy, a total of 170,000,000 francs was obtained, of which Italy would have 89,000,000 francs, or twice her 1873 coinage. This concession to Italy, at a time when that country was under a forced currency régime, and was unable to keep her money at home (since it escaped into France and Switzerland almost immediately after being coined), was deemed particularly unreasonable.

At the next meeting the amount was raised to 94,000,000 francs. Finally the conference fixed it at 120,000,000 francs, distributed thus:

This total comprised the mint vouchers already issued and falling due in 1874. The 60,000,000 francs which the National Bank of Italy desired to transform into coin, in addition to the prescribed quota, constituted a genuine difficulty; for if Italy’s wish in that respect had been granted, her coinage would have surpassed that of France. After lengthy debates, the aggregate of the supplementary coinage was placed at 20,000,000 francs. The French delegates were hardly less strenuous in opposing the demand for the legal-tender quality for Italian coins in the various States of the Union than they had been in resisting the Italian claims as to the quota. They made a peremptory protest. “This same demand,” said the president, “was made in 1865, and it was not deemed possible to accede to it in France, because of the resistance that such a course appeared to deserve. The general tendency of public opinion in France has become strengthened by our experience with numerous types of foreign moneys which for a considerable time have been a part of the country’s circulation. The French Government would regard the recommendation of a law designed to make these moneys legal tender as utterly devoid of the possibility of acceptance by the National Assembly. Neither can the French Government interfere to compel the Bank of France to receive at its offices the Italian silver moneys. Notwithstanding the Government’s desire to arrive at an understanding, it can enter into no engagement whatever on that point.” The Belgian delegation took the same position. Switzerland, as a disinterested country (for, so to speak, she had no money of her own), supported Italy’s contention, and urged that, in default of legal tender, France and Belgium could at least induce their banks of issue to accept the five-franc pieces—a suggestion that met with unanimous approval. The Minister of Finance consulted with the management of the Bank of France, to ascertain whether the Bank would consent to take the five-franc coins of the Latin Union. The Bank replied, on January 30, 1874, that the policy it had enforced was occasioned by the need of putting restraints upon silver speculation, but that in view of the new decisions of the four associated States, it would discontinue its prohibitions for the year 1874. A like answer was received from the Bank of Belgium. Thus, the object of the conference was attained. The following is the substance of the principal resolutions of January 31, 1874: The five-franc silver coinage for 1874 was limited to 120,000,000 francs, deducting from this amount 49,868,000 francs of mint vouchers issued up to December 31, 1873. Italy was authorized to strike during 1874, for the reserve fund of the National Bank, 20,000,000 in five-franc pieces, all of which coin was to remain in the vaults of the Bank, under the guaranty of the Government not to circulate it, until the next conference, which was to meet in January, 1875. Article 12 of the convention of December 23, 1865, relating to the right of other countries to join the Latin Union, was modified. The privilege of membership in future was made subject to previous agreement by the associated States. Greece, not having been invited to participate in the conference, claimed that she was not bound by the stipulations of the agreement of January 31, 1874. As, however, this question was not raised until toward the end of 1874, it was decided by common consent to leave it for the action of the Conference of January, 1875, to which Greece should be invited.

CONFERENCES OF 1875 AND 1876.

The next conference came together on January 25, 1875. Its purpose was to determine whether the measures limiting the coinage of silver should be continued. All agreed that such a continuance would be expedient. But Italy demanded the right to coin 40,000,000 francs more, urging the necessity to create a reserve fund for banks of issue and to effect the conversion of a certain amount of non-decimal old money. In addition, she requested authority for the National Bank to place in circulation the 20,000,000 of five-franc pieces that were held in its vaults in obedience to the resolves of the 1874 conference. The conference, while reducing the supplementary quota of Italy to 10,000,000 francs, empowered her to circulate the 20,000,000 francs of the Bank that had been lying idle. Pursuant to the expressed desire of Belgium and Switzerland, the quotas of those countries were increased by one-fourth. As for France, since the agreement of 1874 was essentially restrictive and limiting, with a view to protect her against promiscuous issuance of five-franc pieces, it would have appeared but rational if she had declined for herself the right to increase the five-franc coinage. But her representatives thought that the four contracting States should be on a corresponding basis. Besides, each country was at liberty to waive the privilege conceded. The maximum amount of silver coinable by the Union for 1875 was fixed at 150,000,000 francs. It was resolved that another conference should be called to meet in Paris in January, 1876, and that mint vouchers for 1876 put forth up to that time in the various countries should not be in excess of half the quota for 1875.

With regard to the special circumstances of Greece, it was insisted by that country that her share in the total coinage should be adjusted not alone by the schedule of 1874, but also in proportion to the amounts struck by the several nations previously. This was thoroughly inadmissible. As a matter of fact, no limitation had been imposed upon the coinage of silver in the nations of the Union until 1874, and the more or less large issues had not been dependent upon the joint will of the allied governments, but upon the convenience of single governments. Thus it was quite out of the question, in a conference having for its aim to limit silver coinage, to allow Greece the scope she desired. Entitled to five francs in five-franc pieces per head, she would have been privileged to coin at least 75,000,000 francs if her request had been granted. As the Hellenic delegates were not present when the agreement was signed at the conclusion of the conference, the French Government was empowered to conduct negotiations with Greece on the basis of 5,000,000 francs for 1875. Greece accepted, reserving the privilege to demonstrate at the next conference that the 5,000,000 francs allowed was insufficient.

To complete the work in hand it was requisite to arrange terms for the acceptance of silver coins in the four countries. There were no difficulties to contend with in Italy, which accorded legal circulation to the coins of the Union, or in Switzerland, which struck no five-franc pieces, but used those of the other States. But, in France and Belgium, the circulation of the Union’s money had to be provided for by persuading the banks of issue to agree to receive them. The Bank of France, when the matter was laid before it, consented in very guarded terms, dwelling upon the anxiety which the uninterrupted growth of its silver stock had caused. In a letter of February 4, 1875, in behalf of the Bank, the following was said: “It is our opinion that the conditions which superinduced the legislation by the four contracting Powers restricting the coinage of five-franc silver pieces are still in operation. We express the desire that the agreement about to be renewed shall be modified in practice as little as possible. We will continue, for 1875, to take over our counters the coins struck by the contracting nations under the provisions fixed by the agreement.” A letter conceived in similar terms, dated January 5, 1875, was received from the Bank of Belgium.

CAUSES COMPELLING A LIMITATION OF COINAGE.

The conference contemplated by the resolutions of 1875 met in Paris January 20, 1876. The considerations that had rendered limitation of the silver coinage imperative in former years had acquired added strength during 1875. The standard ounce of silver had fallen to 55½ pence on the London market on June 11th, making the ratio of gold and silver intrinsically 16,989. Throughout the year, the ratio ranged above 16.3. The Bank of France saw its stock of silver coin augmented enormously, having increased as follows from 1871 to 1875:

Thus, in a period of five years, despite all the endeavors to maintain silver in circulation, the stock had nearly quadrupled. It was consequently needful to preserve the restrictions on coinage. But those restrictions, though absolutely necessary, operated to further abridge the utilization of silver, and thereby to increase its depreciation. At the first meeting of the conference M. Feer Herzog, the Swiss representative, said: “Never since the discovery of America has the relative value of silver fallen so low; and we cannot fail to see in this strange circumstance the evidences of a situation which is most menacing to the future of nations that permit the accumulation within their borders of an already depreciated metal whose decline must necessarily continue from day to day.” He concluded by recommending the total suppression of silver coinage and the substitution of the single gold standard. But as France was not inclined to pursue that course, Switzerland urged that the limit of 1875 be reduced to the farthest extent possible. The French delegates, while recognizing the justice of M. Herzog’s views, were in a delicate position. The National Assembly that had approved the coinage plan of 1874 had been dissolved and a new Chamber was about to convene. The Government felt itself obliged to leave matters in statu quo and do nothing that might be interpreted as binding, or that might embarrass the action of the representatives of the nation. This difficulty was very skillfully disposed of by M. Jacobs, the Belgian representative. Greece had been authorized to strike 5,000,000 francs for the year 1875, which was really insufficient, since that amount did not, as in the other States, provide for the conversion of old coinages. The Greek Government asked, and not without reason, for permission to coin 25,000,000 francs in 1876. This total, manifestly going to extremes—and particularly so if the proposed amount should be minted at once—was reduced to 12,000,000 francs. M. Jacobs proposed to adopt again the basis of 1874, and provide for a maximum of 120,000,000 francs, minus 12,000,000, to be conceded to Greece pro rata out of the quotas of the other States. This was agreed to, and the quantities to be coined during the year were apportioned as follows:

Greece, in addition to the 3,600,000 francs thus provided for, was granted the privilege of an exceptional coinage of 8,400,000 francs to replace the five-franc pieces of old coinages in circulation. It was decided that none of the contracting States should issue mint certificates for maturity in 1877 in excess of half the 1876 allowance.

The international agreement was signed on February 3, 1876. The Banks of France and Belgium, when requested to pledge themselves to accept the silver moneys of the Union, readily agreed, as they had done in the previous years. The new restrictions laid upon silver coinage had the effect of contributing to the further decline of silver. In the month of June, the metal was worth only 50d, per ounce in London, and on that basis the ratio of gold and silver advanced to 18.69. In England, public opinion, alarmed at such depreciation, which seriously affected the trade with India, demanded an inquiry for the determination of its causes and consequences. A commission was appointed, and Mr. Goschen, after gathering much data, summed up matters in rather vague terms by stating that, as the fall in silver depended upon uncertain elements and contingent values, the future state of the market could not be reasonably prognosticated. In France, M. Léon Say, Minister of Finance, deeming it inexpedient to have the coinage conducted at the sole pleasure of individuals, submitted to the Senate, on March 21, 1876, the draft of a measure authorizing the restriction or entire discontinuance of minting by decree. We quote from his explanatory statement: “Since 1865, there has occurred a certain depreciation in the value of silver. The Powers subscribing to the convention have considered it prudent, since 1874, to put a check upon the coining of five-franc silver pieces. A maximum coinage has been designated for the countries of the Union, amounting in 1874 to 120,000,000 francs, in 1875 to 150,000,000 francs, and in 1876 again to 120,000,000 francs. The share allotted to France was 60,000,000 francs in 1874, and 75,000,000 francs in 1875. This year (1876), it is 54,000,000 francs, with the privilege to coin at least 27,000,000 francs in 1877; which implies that our mints are limited to 81,000,000 francs until a new arrangement shall obtain. But as the home legislation of France has not meantime been altered, the amount which is maximum from the point of view of the State is minimum as regarded by interested individuals. Indeed, from the very day that France was empowered to strike 54,000,000 francs of five-franc pieces, the owners of silver have had a perfect right to insist that the Government neither can nor should deny them the privilege to convert their bullion into coin, so long as the international convention is not violated—in other words, so long as the prescribed bounds are not overstepped. They are therefore entitled to demand that five-franc pieces be minted for them until the quota apportioned to France shall have been exhausted.” After calling attention to Belgium’s suspension of silver coinage in 1873, M. Say concluded by declaring that, in view of the depression of silver, respecting which it was difficult to form a definite judgment, he believed it to be convenient, without wishing to solve the question whether the single or double standard was preferable, to assume a waiting attitude and not increase the quantity of silver pieces.

On the same day, M. de Parieu discussed the coinage question in an extended interpellation, in which he directed attention to a curious fact. He said, in substance, that the Conference of 1876 limited by resolution, which it was wrong not to submit to Parliament, the issuance of mint certificates in 1876. That would have been a perfect arrangement if individuals had not come forward in France and endeavored to have the Government admit the soundness of the following reasoning: “Though the business year 1876 is provided for, the resolution is silent so far as 1877 is concerned. Consequently, certificates payable in 1877 may be issued.” In other language, added M. de Parieu, a barrier erected for 1876 had been jumped, and certificates for the year next following were put forth, whereby the future contingents had been anticipated; and this very simple speculation had yielded its originators eight per cent. In his response, the Minister of Finance confined himself to the plea that there were extenuating circumstances for the past, and said that his views concerning the practical matter under consideration were sufficiently indicated by the details of the proposed act for the suspension of silver coinage. On March 29th, M. de Parieu, following up his interpellation, introduced in the Senate a bill more radical than that of the Minister of Finance, ordering the suppression of mint certificates. M. Rouland was appointed to make a report upon the two projects. He approved the course of the Latin Union in guarded terms, and concluded by recommending the adoption of the Government plan. M. Rouland’s report brought out nothing new. He stated that France, by the wide range of its markets and by its generally favorable exchanges, naturally became the collector of the Latin Union’s five-franc pieces. He presented the following statistics, which afford good material for reflection:

These figures show that as silver declined the minting increased. The amount coined in 1869 was 141,000,000 francs, which was entirely sufficient; yet, even under the restrictive arrangement, the coinage reached the very high aggregates of 139,000,000 and 155,000,000 francs.

THE FRENCH LEGISLATURE SUSPENDS SILVER COINAGE FOR PRIVATE ACCOUNT.

The Government scheme hung fire for a long time in the Senate and Chamber of Deputies, and was finally adopted, without modification, on August 5, 1876. On August 6th a decree was issued announcing that bullion and other material for the coinage of five-franc pieces for private account would no longer be admitted. Meanwhile, in the Belgian Parliament, M. Frère-Orban had interpellated M. Malou, Minister of Finance, on the coinage question. It is well to remember that the allowances successively granted to the several countries bore no relation to their legitimate needs, excepting probably in the case of Greece; and that in various instances they served only as a means to levy a convenient tax upon the circulation of neighboring States, the effect of which was not immediately felt. To levy such a tax, the only thing needful was to buy silver at the rate of the day—ten to twenty-five per cent. less than the nominal legal value—and throw it upon the market after transformation into five-franc pieces at face value. M. Frère-Orban’s interpellation bore upon such transactions. M. Malou confessed that he had bought bar silver for 10,800,000 francs with three per cent. consols, for the purpose of making a profit for the State. In his defence he said: “Is the five-franc piece false money? It is worth five francs, and therefore I could not make scandalous profits.” This provided his interrogator with an inviting opportunity, which was availed of in the following severe words: “Why has the Government bought and coined for the account of the State? By its own admission, to make a profit. The five-franc piece is always worth five francs; but whence comes the profit? It comes from the circumstance that you legislate in recognition of fundamental wrong, proclaiming against truth, against plain evidence, and against the nature of things—proclaiming, I say, in perpetuity that fifteen and a half kilos of silver shall always exchange for one kilo of gold. The Government, to gain a miserable profit, has swelled the burdens of the State in the event that demonetization shall occur, and has increased the amount of the coinage, as you admit.” The incident had no practical issue; but it afforded a demonstration of the spirit of speculation that actuated the demands for unnecessary coinage. M. Frère-Orban enjoyed a sort of satisfaction afterward, when the Belgian Chambers were convoked by the Ministry to vote upon an extension of the law of December 18, 1873, until January 1, 1879.

ADDITIONAL AGREEMENT OF JUNE 30, 1879.

No monetary conference was held in 1878. The law of August 5, 1876, gave to the French Government the right to limit or suspend the coinage of five-franc pieces until January 31, 1878, and, accordingly, the exchange bureaus of the mints of Paris and Bordeaux had been closed on August 6th. Thus the most imminent perils were warded off, and the Minister of Finance was able to postpone the conference that should have assembled in January, 1877. It was the opinion of the French Government that it would not only be needless to have the conference meet, but dangerous, inasmuch as embarrassing discussions would be raised. The request for postponement was accepted by all the interested countries. Italy, however, claimed the right to complete, in 1877, the coining of the quota assigned to her in 1876. It will be remembered that the agreement of February 3d authorized her to issue 18,000,000 francs of mint certificates in anticipation of the quota to be fixed for 1877. She also demanded that the Banks of France and Belgium should continue to accept Italian coins. As the increase in question was a matter of but slight importance in the aggregate amount of coined silver, Italy’s concessions were acceded to by her associates, and also by the Banks of France and Belgium. Greece complained that the 12,000,000 francs conceded to her in 1876 had been almost wholly consumed because of the demonetization of foreign coin circulating among her people, and she obtained permission to mint 5,000,000 francs. Toward the end of 1877, the French Government, much concerned about the monetary situation, was most anxious to avoid as long as possible another conference, whose printed proceedings could not fail to present a striking disavowal of the double standard policy that she had so long supported. The Government hoped, however, to find a means of escape from its troublesome position, counting upon the moral effect of a decision by Congress at Washington in favor of re-establishing the double standard in the United States, and upon an improvement in the price of silver, which had been indicated for some time by the growing demands of India and China. France, therefore, proposed to the other governments a further postponement until the last months of 1878, promising an extension of the law of August 5, 1876.

It was impossible to go farther in delay, since the convention of December 23, 1865, was to come to an end on January 1, 1880, and it was consequently indispensable that the conference should take place before the close of 1878, both to consider questions of standard and coinage and to reach an understanding respecting the continuance or disruption of the Latin Union. Belgium, whose situation resembled that of France, accepted the French Government’s proposal, and Switzerland did likewise; but Italy raised difficulties. She insisted on permission to coin silver up to the same amount as in 1877 (18,000,000 francs), upon the acceptance of Italian five-franc pieces at the Bank of France and the Bank of Belgium, and upon the assembling of the conference in the month of April, 1878. Although it was to be regretted that Italy would not consent to suppress completely the coinage of silver, which certainly could not be useful to her, as her domestic exchange was regulated almost exclusively by forced paper currency, she was able to justify at least a portion of her demands by definite reasons. She had withdrawn from circulation a rather important volume of non-decimal coins, which thus had become a dead capital, the use of which she could not afford to lose permanently. This consideration was of a nature to prevent stubborn opposition by the other countries. By agreement they proposed, and persuaded Italy to be satisfied with, a quota of 9,000,000 francs. It was out of the question to do otherwise, for Italy, by simply allowing matters to take their course and returning to the convention of 1865, would have recovered her liberty and been able to mint as many millions as she desired. The banks, speaking strictly, might have rejected the Italian coins; but that procedure would have involved more inconvenience than advantage, and would have inextricably embarrassed the French State funds. Concession to Italy was the only available solution, and all the governments acted sagaciously in agreeing to it. The banks renewed their promise of assistance for 1878.

LÉON SAY PROPOSES TO EXTEND THE LAW OF 1876.

As had been promised in the negotiations for postponing the conference, the Minister of Finance, M. Léon Say, proposed to the Senate a measure to extend the law of August 5, 1876. His explanation was remarkable for its optimism. The sole announced reason was the instability of the money market, which, however, it was stated, had improved. M. Garnier, in his report, added nothing of any significance. M. de Parieu, while glorifying the Latin Union, of which he had been one of the founders, regretted that the energetic methods for the suppression of silver coinage which he had advocated in 1876 had not been adopted. The act was voted without trouble, and was promulgated February 1, 1878.

THE BLAND ACT AND CONFERENCE OF 1878.

On the 18th of the same month, the United States Congress had passed the Bland Bill, authorizing the coinage of silver dollars and making them legal tender. It had, moreover, decided that an international conference should be called to establish an international understanding as to the ratio between the two metals. General Noyes, Minister of the United States in France, made overtures to that effect to the French Government, which led to the resultless international conference held in Paris in August, 1878. As soon as the French Government received the invitation of the United States it sought the advice of the other governments comprised in the Latin Union regarding the reply to be given. All were of opinion that the international conference should be preceded by an exchange of views on the part of the delegates from the Latin Union countries; and for this purpose a conference was called for August 30, 1878, to examine the conditions for a renewal of the compact that was to expire in 1880. At a preliminary meeting, the Italian representatives once more brought forward the old demand for legal tender for gold and five-franc silver coins of each of the contracting States in all the nations of the Union. This Italian demand, rejected in the former conferences, was the logical outcome of the convention of 1865, which required the public offices of each nation to take unrestrictedly and without possibility of exchange and settlement a foreign money which, nevertheless, might be refused by the people to whom the State makes payments, since among them it is not legal tender. If, on the other hand, to forestall this danger, the coins should be invested with the legal-tender quality, individuals would then compulsorily have to receive foreign money—not note money, but actual—struck without the concurrence or surveillance of the Government to which they owe allegiance and which would hold itself responsible without power of control. All this applies equally to gold money; but the ready preference of the public for the yellow metal always assures foreign gold of easy circulation, and so it is the less necessary to pronounce it legal tender in order to keep it current. To finally secure assent to her claim, Italy agreed to a modifying provision, whereby each country, in the case of a breach of the convention, was to take back its own five-franc pieces that might be in the possession of the other States and pay gold for them. Upon this modifying clause turned subsequently the transactions of the Conference of 1885. Having served the desired purpose of an exchange of views, the conference, on October 1st, adjourned.

The Minister of Finance had consulted with the Bank of France about the pretensions of Italy. The management of the Bank did not feel at all satisfied with the outlook, observing that the practical effect would be to deprive the Bank of all right to refuse, if necessary, foreign coins, and thus further swell the stock in its vaults, which amounted already to 270,000,000 francs, whereon the loss in exchange was thirteen to fourteen per cent. Moreover, the question of State responsibility for the redemption of foreign coins held by the Bank had never been settled, and on that score the management had grave anxieties, which found expression in the reply sent, December 5th, to the Minister. In this the Bank, after explaining that the consequences of the 1865 convention were very burdensome, and that the receipts of foreign silver grew daily because of the public’s aversion for the heavy and inconvenient five-franc pieces, rejected with all its energy the proposition to establish legal tender for foreign coins, whether silver or gold. It added that, while it had consented temporarily, upon the State’s demand and in the general interest, to take foreign pieces, it would none the less be entitled to protection under the principles of the common law. In plainer words, it intimated that it would be able to throw upon the State the loss that it might have to suffer from the depreciation of silver. Finally, it was stated that although the convention of 1865 had not provided a method for the liquidation of the five-franc silver pieces, the decline of ten to fifteen per cent. which silver had undergone required imperatively that the conference should not leave the question without solution. This letter furnished the Minister of Finance a reason for rejecting the legal-tender proposal, which accordingly was ultimately set aside. Throughout the conference the question of liquidation was the cardinal subject of discussion by reason of the importance of the interests involved. Italy, having been unable to procure acceptance of her special demands, manifested great repugnance toward a liquidation scheme for the five-franc pieces. “There is in the convention of 1865,” said her delegate, M. Ressmann, “nothing providing for a final settlement for the five-franc pieces, while on the other hand there is such provision for fractional coins; therefore, by the axiom, Qui dicit de uno negat de altero, should it not be assumed that, if the convention of 1865 regulated in so precise a manner the settlements for fractional coins, it deliberately excluded the other from such obligation? If the proposed liquidation cannot be justified on grounds of right, neither can it be on grounds of equity. For, if it is said that forethought of liquidation was impossible in 1865, before the decline of silver, it may be replied that it could, however, have been contemplated in 1874; yet it was so far from contemplated then that recourse was had to limitation of the coinage quotas, which is antagonistic to any idea of liquidation. Therefore a liquidation arrangement can be asked for only on the basis of the reciprocal friendship and good assistance that the States concerned owe one another.”

M. Pirmez, who has since changed his mind, answered M. Ressmann in a truly remarkable manner. “It is not,” said he, “in the convention of 1865 that we must look for the liquidation obligation, but in the circumstance that Italy has established at home a forced currency. The convention stipulated that there should be no other moneys than those designated therein. If it excluded all moneys having other weight or standard than those determined upon, it excluded with much more reason paper money. What would a monetary convention signify to a country no longer having any money? Italy, by right and by equity, must repair the injury she has done to her associates by the forced paper currency.” Notwithstanding the cogent arguments of M. Pirmez, the liquidation clause was not adopted. However, the discussion was not entirely devoid of results, for by the agreement of November 5, 1878, which terminated the conference, Italy declared that it was her intention to put a stop to the emission of paper money of less than five francs, and that, to promote that end, she desired to withdraw the Italian fractional coins from circulation in the other countries. This was a relief of some consequence. The new convention, signed November 5, 1878, reproduced the essential features of the convention of 1865 (expiring January 1, 1880), and was to remain in force until January 1, 1886. It decreed that silver coinage should be suspended, excepting for Italy, which was exceptionally permitted to coin 20,000,000 francs in five-franc pieces during 1879, but was not to resume coinage afterward without the unanimous consent of the contracting States. Attached to the convention was an agreement on the part of the interested nations not to issue mint certificates for the year 1879. The Bank of Belgium and the Bank of France engaged to receive the five-franc pieces of the Latin Union during the whole period of the convention. But this was conditioned upon the preservation of the actual existing basis, and the engagement was to become void in case the free coinage of silver should be resumed, or in case any of the States wherein the money of the Union was legal tender should abolish the legal-tender policy without substituting engagements similar to those of the Banks of France and Belgium.

WITHDRAWAL OF ITALIAN COINS FROM OTHER STATES.

The withdrawal of the Italian coins from the other States was a difficult process. The details were regulated by an arrangement dated November 5, 1878, of which we give the outlines: From December 31, 1879, Italian fractional coins were to be no longer current in Belgium, France, Greece, and Switzerland. In the month following the conclusion of transactions, all such coins were to be remitted to the French Government, which was to undertake to pay for them, principal and costs, and to forward them to Italy. The account between France and Italy was to be closed January 31, 1880. The amount of the moneys to be returned to Italy was reckoned at 100,000,000 francs, of which 83,000,000 fell to the share of France, and 13,000,000 to the other countries. Italy was to take back first the 13,000,000 francs, then the 87,000,000, and, finally, the excess, if any. The transactions of the Italian Government were to give rise to a “current account,” the interest whereof was to be settled at three per cent. per annum, from the day on which the coins taken out of circulation should cease to be current. The times of payment for the moneys were specified, and the Government of Italy engaged to retire and destroy within six months at latest, from the completion of the fractional coin remittances, all its fractional paper below five francs. Italy also pledged herself to refrain from issuing new scrip of this kind, and to communicate to the other governments a statement of the withdrawals and destruction of fractional paper scrip as they were accomplished.

A SERIOUS DISPUTE WITH ITALY.

The convention received legislative approval in Belgium and Switzerland. In the French Chamber of Deputies it was on its first reading when a serious complication occurred. Italy, whose Ministry had resigned, made the following demands on the pretext that the convention of November 5, 1878, would not be approved by the Parliament: (1) That Italy be granted the right to coin 80,000,000 francs of five-franc pieces instead of 20,000,000, at the rate of 20,000,000 francs a year, from 1879 to 1882 inclusive, in order to put to use a supply of old Bourbon and Papal coins. (2) That she be not required to engage by international agreement to withdraw absolutely from circulation the small scrip, since it appeared to her that such a requirement would be an interference with her national sovereignty. Italy took this position on the ground that the new convention was less favorable to her than the one of December 23, 1865. By the original terms, she said, the contracting States were allowed two years to take back their fractional moneys and exchange them for current money, which would allow her to distribute her redemptions over the years 1879, 1880, and 1881, without payment of interest; whereas the new convention obliged her to take back the coins through the years 1880, 1881, 1882, and 1883, and to support an interest of three per cent.

As to the first point made, it seemed strange that Italy, having procured exceptional coinage privileges in the former years, should come forward asking for a supplement of 60,000,000 francs—especially in view of the great reluctance with which the other States had finally yielded her so small an allowance as 20,000,000 francs. Such an augmentation of the coinage would have been viewed very unfavorably by the Bank of France, whose coin stock on hand was more than half silver. For the rest, it was utterly inadmissible to permit Italy to retain her small scrip in circulation and thereby do away with the sole guaranty that the States had against the renewed turning out of her fractional coins. Lastly, the three per cent. which Italy regarded as a sacrifice was but a recompense for the capital that France had to employ for the withdrawal of the fractional moneys. Simple inspection of the 1865 convention shows that the period of two years specified for the exchange of coins was intended for the benefit, not of the debtor State but of the holders of the moneys. The exchange had to be effected as soon as called for, without delay, and thus no interest was to be paid to the holders. The new claims of Italy threatened nothing less than a rupture of the Latin Union. A rupture of the Union would have been disastrous first for Switzerland, where Italian pieces were legal tender, and next for France. From 1867 to 1876, Italy had thrown into France 1,131,000,000 francs of metal and had taken back only 215,000,000 francs. The excess was, therefore, 916,000,000 francs, or at the rate of 83,000,000 a year, employed principally to pay for coupons of bonds. Consequently, if on the basis of the 1865 compact, France could compel Italy to exchange, without delay, 100,000,000 francs of fractional money, she was, however, disarmed so far as the five-franc pieces were concerned, which were forcibly kept back in the French circulation and would have accumulated in the vaults of the Bank and the Treasury. The embarrassments of this situation impressed all minds.

THE CONFERENCE OF JUNE, 1879.

After an exchange of views among the countries of the Union, it was decided that a new conference should assemble in Paris. The propositions for consideration were: (1) France and Belgium are firmly resolved to maintain the principle of the coinage of silver. (2) Agreeably to this principle the Italian Government will withdraw its demand for five-franc silver coinage. The French Government will thereupon concur, with its associates, in the proposal to be made by Italy for the negotiation of a new act, supplementary to the convention of 1878, which shall permit her to provisionally retain the small scrip in circulation. In all cases, as a measure of safety, and for the purpose of withdrawals, joint action will be taken against the reappearance of fractional silver coins and as to the destruction of small scrip. The conference met June 11, 1879. It held five sessions and came to an end on June 20th, adopting an agreement which gave full satisfaction to Italy so far as it was possible to do so without conceding the important point of the supplementary coinage of 60,000,000 francs. Instead of having only six months’ time for the withdrawal and destruction of scrip after the receipt of the retired coins, she was granted all the time she required. She was obliged to repay in current cash 13,000,000 francs of small coins returned by Belgium, Switzerland, and Greece. But she obtained from France an option to take back the fractional moneys immediately (that is, during the first six months of 1880), or to postpone the taking back, with a storage charge of one and a half per cent. In either case, the sums transmitted to Italy bore a maximum interest of three per cent. from the day of delivery until the day of reimbursement. As a guaranty against the refloating of the fractional coins, it was prescribed that these moneys returned to Italy should be held and could only be put into circulation again when the suppression of the small scrip should be decreed by the Italian Parliament, and then only to serve as redemption money for the scrip. Finally, the conference adopted a resolution giving Italy her choice between the convention of November 5, 1878, and the agreement of June 30, 1879. The Italian Parliament gave its preference to the new arrangement. The additional act and the monetary convention of 1878 were approved by the French Chambers, and promulgated July 30, 1879.

To provide effectively for the amassing and withdrawal of the Italian pieces, the Minister of Finance addressed himself to the Bank of France and entered into a contract with it, under date of September 4, 1879, whose principal terms were as follows: The Bank agreed to amass the Italian moneys taken from circulation and to transmit them to the Italian Government, either immediately or later, as that Government should elect. The French Government agreed to send to the Bank the Treasury drafts and cheques given by Italy in payment, and the Bank was to have the full benefit of the interests paid by Italy. These interests, as determined by an agreement between the Bank and the Minister of Finance, were reduced from 3 to 2½ per cent., the consideration for keeping the moneys on storage (in case Italy should postpone their return) remaining at 1½ per cent. The Bank had to bear the expenses of the withdrawals, provided they did not exceed 250,000 francs. As recompense for the advantages that the Bank might derive from this contract, it was to keep at its own risk and peril a sum of 2,700,000 francs of Papal coins that it had in its vaults, and to sustain, up to a maximum of 130,000 francs, the costs of retiring Italian copper coins from French circulation, which the Minister of Finance desired to bring about. The work of retiring the Italian moneys and forwarding them to Italy was finished in November, 1883. The deliveries amounted to 78,877,000 francs, of which France supplied 70,819,000 francs, Belgium 6,501,000 francs, and Switzerland 1,557,000 francs. Greece took no part in the transactions, as the quantity of Italian coins circulating among her people was without significance.

ITALY AGAIN REFRACTORY.

It seemed reasonable to think that the convention of 1878, which was entirely favorable to Italy, would settle the coinage question for some time. The result was quite to the contrary. Italy again called for a new coinage allotment, this time on the pretext that her population had not been correctly calculated. Belgium protested. Soon afterward a royal Italian decree (August 12, 1883) modified materially the bimetallic principle established by the Monetary Union. The following is a translation: “The metallic reserves of all establishments of issue which, on June 30, 1883, did not have the proportion of at least two-thirds in legal gold money or gold bullion, shall, within two months from the promulgation of the present decree, be reconstructed so as to have at least two-thirds in metallic legal gold values and not more than one-third in metallic legal silver values. It is prohibited for any establishments of issue to convert into silver the portion of gold reserve in excess of two-thirds existing on June 30, 1883.” The Italian banks, to conform to this decree, refused silver money—even national silver money—except in the way of payment, and would not accept it either in current account or for exchange in bank notes. Notwithstanding all these predicaments, the convention of 1878 operated as an improvement, since it suspended for a rather prolonged time the coinage of silver.

AGREEMENTS OF 1885.

In 1881, at the instance of France and the United States, an international conference met in Paris with the object of promoting a common monetary system based on bimetallism. As usual, this conference accomplished nothing definite and afforded no advantages except interesting minutes. The convention of 1878, so laboriously constructed, was to terminate on the 1st of January, 1886, unless extended by general agreement. Early in 1884, Italy showed anxiety for a new convention. The Minister of Finance, Signor Magliani, seemed desirous of creating a situation in which gold should be the predominating element, awaiting circumstances for placing the country on a basis of absolute bimetallism. Switzerland, having suffered some losses from the convention of 1878, demanded, on January 11, 1884, the calling of a new conference, to consider details for a new understanding. The conference, after being several times delayed, began its deliberations on July 20, 1885. The wishes of France were: 1, The continuance of the Latin Union; 2, insertion of a settlement clause; 3, provision of taking measures to ensure equal treatment of gold and silver; 4, prohibition of all the States of the Latin Union to issue or maintain in circulation small scrip as injurious to the circulation of silver; 5, revision of the per capita basis of fractional coins. Items three and four had reference mainly to Italy. Her decree concerning the composition of the metallic reserves of the banks had been an interference with the equality of treatment due the two metals, which was indicated by the spirit, if not the letter, of the Union’s conventions. By preserving 350,000,000 francs of small scrip in circulation, she arbitrarily narrowed the field open to five-franc pieces and fractional silver coins. But the principal matter of difficulty was the proposed settlement clause—a clause which should bind the different countries, at the expiration of the Union, to take back the silver pieces struck by them and, after making mutual exchanges, to settle balances in gold or equivalent values. It is easily understood how strong an interest France had in urging such a clause (which, by the way, Italy and Switzerland approved) when it is stated that on November 5, 1878, the Bank of France had on hand 1,031,700,000 francs of silver, and on July 20, 1885, 1,150,900,000 francs—an increase of 119,200,000 francs. Of the 1885 sum, according to an estimate made at the time, 28.76 per cent. was in foreign pieces. The depreciation of silver, which in 1878 was ten to twelve per cent., had reached seventeen to eighteen per cent. in 1885. But the reasons that caused France to be so solicitous for a settlement clause were precisely the reasons inducing Belgium (which, more than any other country, had contributed to the plethora of silver by coinages far beyond her needs) to oppose the plan. Consequently, at the meeting of January 23, M. Pirmez, the Belgian delegate, in a lengthy explanation, showed why the settlement clause should be rejected; and, strange to say, he made use of arguments presented in 1878 by M. Ressmann, the Italian delegate, and resisted by him on that occasion. As these representations were of much importance, we here quote them:

This, as will be perceived, is a repetition of the reasoning of M. Ressmann in 1878. “Belgium,” concluded M. Pirmez, “is free from all engagement as to the five-franc coinage she has issued. A demand is made upon her to contract a new agreement and to assume a retroactive obligation to redeem in gold the excess of silver money circulating abroad. Belgium cannot consent to that, and she would prefer the disbanding of the Latin Union, however troublesome that might turn out to be. Belgium is ready, however, to engage to put no obstacle in the way of the return of her moneys through the channels of commerce and exchange, and to carry the spirit of conciliation to its farthest limits.” M. Pirmez had shown himself a skillful advocate of a difficult cause, and it was not easy to contend with him on the narrow ground he had chosen. His opponent, M. Luzzatti, the Italian delegate, did not even attempt to do so. Joining in the debate, he said: “Whatever may be determined upon, genuine balancings must be made, and will be made. In conference one may refuse to receive in payment the five-franc pieces which one’s government has struck, or to accept them at par with the more highly valued metal, but one speaks in such cases only on the line of theory, which is never put into practice. Each State takes the five-franc pieces of its coinage which are presented by its people; it cannot hedge itself in from the obligation, written or unwritten, to take them when they return from abroad. It will take them back, it will pay them in some form—in money, merchandise, drafts, interest on the public debt, or otherwise; but it will get them back; that material outcome is certain. Only it is of the highest importance to know how the result will be attained. Final balancing may be transacted in two very different ways: by contract, or in the natural course. The latter method might be a severe one under some circumstances. If by contract, all signers of the agreement are assured of ultimate settlement by the settlement clause, which fixes, in advance, an equitable and normal procedure for all concerned at the termination of the monetary pact.”

Signor Luzzatti’s reasoning did not suffice to convince M. Pirmez, who replied that his instructions would not permit him to subscribe to the view of the Union governments so ably defined by Signor Luzzatti, and he withdrew from the conference. The settlement clause, satisfactory in principle to all the countries but Belgium, was adopted on July 24th, but, to give Belgium time for reflection, it was decided to have the signing of the protocol remain in abeyance.

When the conference held its next meeting, July 30th. the Belgian delegates had received new instructions, and, besides, they perhaps viewed with alarm the probable consequences of a disorganization of the Union. They proposed various expedients: that the settlement clause be stricken from the agreement, leaving the signatory Powers to make separate arrangements among themselves; that the convention of 1878 be extended for a year, which would allow time to reach an understanding on the disputed points, etc. All the alternatives proposed by Belgium, which at bottom were only dilatory devices, were rejected, and the Belgian delegates withdrew permanently. The labors of the conference were suspended after August 5th, at the desire of the Italian representatives. At the concluding meeting, an agreement was formulated by which all the contracting parties—France, Italy, Switzerland, and Greece—were brought in accord except as to some points held open. The protocol had a strong menace for Belgium, whose coins were not to be received by the other countries three months after the expiration of the convention of 1878.

THE CONFERENCE RECONVENES.

The conference did not reconvene until October 22d. In the interim, negotiations were undertaken by France to persuade Belgium to come back into the Union; but the language that had been used by M. Duclerc, president of the conference, and, still more, the settlement scheme, threatening Belgium with considerable loss, had angered the Belgian people. The views of M. Pirmez were approved by all parties; and M. Frère-Orban, who had interpellated the Minister of Finance about the action of the delegates in leaving the conference, coincided with M. Malou in highly approving the attitude of M. Pirmez.

M. Pirmez now suggested a plan which could not be accepted, since it offered no remedy; but it illustrates how difficult it was to deal with the settlement clause. This project stipulated that each country should be free to step out of the Union at pleasure, assuming the responsibility to transact the settlement for its coins and bearing the losses resulting therefrom. This plan was laid before the conference rather inexplicitly. M. Pirmez went at length into the question, without coming to a conclusion. The conference continued its work without the co-operation of the Belgian delegate, who, after an interview with M. Duclerc, decided that his immediate return would be useless, neither side being disposed to yield anything. However, it was understood that upon the signing of the articles of the convention, the Belgian Government should be advised, so that it might either concur in them or submit proposals. The articles were signed, November 6th, by France, Switzerland, Italy, and Greece. The Belgian Government was notified at once. It suggested another arrangement, in substance as follows: “If a settlement shall occur, France will amass the Belgian coins circulating in the States of the Union and will herself proceed to exchange them with Belgium. If, after balancing, Belgium shall still be debtor to France, the difference shall be divided into two parts. The Belgian Government will, within five years, pay for the one-half in gold or drafts on France, and the other half will be sent back through commercial and exchange channels. Belgium shall make no change in her monetary system of a character to interfere with this taking back of coins, and she guarantees that the balance to be settled shall not be in excess of 200,000,000 francs.” This was regarded as an acceptable offer, and it was approved by the French Government in principle.

But another stumbling-block had to be got over. In the protocol of November 6, 1885, it was said in substance: “In the event that one of the governments of the Union, either directly or through the instrumentality of banks of issue, shall effect an arrangement with the Belgian Government for repatriating the five-franc pieces, such arrangement shall be submitted to the other States of the Union for approval. In case of non-approval, each of the other States will have, with regard to the State effecting such arrangement, the choice between agreeing to the arrangement or acting in pursuance of the settlement clause already adopted.” The Italian Government, informed of the understanding arrived at between France and Belgium, claimed the right to reserve to itself the privileges granted by the protocol. This gave rise to a possibility that circumstances might come to pass which would make it preferable for France to hold Italy to the settlement clause, and to send back the Belgian pieces at the risk and peril of France. Nevertheless, as it was all-important that Belgium should stay in the Union, it was determined, after long negotiation, that France and Italy should mutually claim the benefit of the conditions given to the Belgian Government as to the regulation of their accounts, so that the maximum balance of the repatriated coin should be 200,000,000 francs so far as Belgium was concerned. Greece reserved the right of choice at the time when she should abandon the régime of forced currency.

To provide for the special case of Switzerland—which, having struck no five-franc pieces, might have suffered from dearth of coin under the proposed mode of settlement—it was decided that France, Italy, and Belgium should settle “at sight” in Swiss five-franc pieces and ten-franc gold pieces and higher denominations for the moneys presented to them by the Swiss Confederation.

THE SETTLEMENT CLAUSE AND PROLONGATION OF THE UNION.

The settlement clause being thus adjusted, thanks chiefly to the energy of the distinguished governor of the Bank of France, M. Magnin, the other matters were of but secondary interest. The Union of 1865 was prolonged to December 31, 1890, by the terms of the additional Act of December 12, 1885, which restored Belgium to membership in it. Silver coinage was further suspended, not to be resumed without the unanimous assent of the contracting States. Any State desiring to have free coinage again was required preliminarily to redeem in gold and at sight the silver coins of its mintage that circulated in the other nations. The proportion of six francs per head of fractional money was preserved; but the Italian Government, as always previously, under pretext of withdrawing its non-decimal pieces, obtained permission to issue a supplementary amount of 20,000,000 francs in fractional silver. Switzerland—quite justly, in view of the requirements of her situation—was granted a quota of 6,000,000 francs. France was empowered to remint, up to 8,000,000 francs, the Papal coins which she had been unable to have Italy repatriate in 1872.

The terms of the convention of 1885, which in general respects were an improvement upon those of 1878, were particularly reassuring to the Bank of France. Conditions of settlement for the foreign moneys held by that establishment had never been determined, and it had been feared that the coins would ultimately remain wholly or in part on its hands, inflicting a loss that States of the second class would scarcely be able to make good. The Minister of Finance, in a letter dated October 31st, asked the Bank to receive the five-franc pieces of the Latin Union during the period that the convention had to run, and stated that at the end of that time the settlement for the foreign five-franc pieces then in the Bank’s vaults would be undertaken for the account of the Government. This time, the rights of the Bank were fully recognized, which was but proper, since the Bank had taken the coins of the Union only upon the demand and in the interest of the Government. The Bank consented to lend its co-operation to the State as formerly, but a proviso was made in the agreement that it should not be bound by the tacit extension clause.

CONTINUATION OF THE UNION AFTER 1890.

The convention was for five years, and therefore was to expire December 31, 1890. But none of the contracting States had any interest in its dissolution, and it was extended from year to year by tacit agreement. Since December 31, 1890, the Bank of France has yearly engaged to receive over its counters the coins of the Latin Union for the account of the Treasury.

Incidental reference may be made to the International Conference of 1892, which met at Brussels in response to the invitation of the United States Government, to establish a uniform international ratio between gold and silver, and to increase the employment of the latter metal in the world’s circulation. Twenty governments were represented. The debates were long and interesting, but nothing practical was realized. The conference adjourned sine die on December 17, 1892.

THE CONFERENCE OF 1893.

A conference concerning the Latin Union exclusively was held in 1893, at the request of the Government of Italy. The rise in Italian exchange had caused exportations of the fractional coins, which were taken in payment at the receiving offices of the other associated countries. These constituted a means to settle international debts, even such as were payable in gold, since it was sufficient for Italy to send fractional money into France, drawing upon French bankers and dispatching the resulting drafts (worth par in gold, and even a little more) to creditors. But these proceedings had exhausted the fractional moneys at home, and Italy became much embarrassed because of the scantness of the medium for every-day business. The Italian Government, tied by the conditions of the Latin Union, which fixed the amount of fractional coin utterable at six francs per head, had not the power to coin any more. To exercise that power it would be necessary to abrogate the convention of 1885, which would imply obligation to pay in gold a sum that might reach one hundred and fifty or two hundred millions, and to risk a formidable rise in exchange. The Government, in view of these perils, sought to make a remedy for the meagre supply of small silver by issuing copper and nickel coins, not provided for in the convention of 1885; but this device did not meet the case. The Minister of the Treasury, Signor Grimaldi, put forth a decree, on August 4, 1893, authorizing the issue in scrip, secured by fractional coin, of 30,000,000 of the denomination of one lire. The project was a good one, for the small notes would have no circulation outside Italy, and were a substitute for coin, which was being constantly exported, and which, being represented by redeemable paper, would have to remain at home. But the Italian Government did not possess thirty millions of fractional coin, and it resolved to provisionally emit a portion of the thirty millions of Treasury scrip secured by gold or silver money having legal-tender currency in the kingdom. This feature of the decree was a manifest infraction of the convention of 1885, which rigorously limits fractional coins, and it excited complaint, chiefly on the part of Belgium. As a way out of the difficulty, Italy opened negotiations to have the contracting Powers return the fractional coins struck by her which circulated within their dominions, and, moreover, to have them pronounce those coins noncurrent, so as to prevent their outflow. France, Belgium, and Switzerland received these overtures favorably. A conference assembled in Paris on October 10, 1893, and drew up an agreement by which Belgium, France, Greece, and Switzerland were to withdraw from circulation Italian two-franc, one-franc, 50-centime, and 20-centime pieces, and send them to the Italian Government, which thereupon was to pay for them half in gold coins of ten francs and over, and half in drafts upon creditor countries—the drafts not to run longer than three months. Each of the four States was empowered to prohibit the entry of Italian coins, but the Italian Government reserved the right to have the old state of affairs re-established later.

The coinage quota fixed by the old agreements was expressly maintained, and it was understood that the Treasury scrip of denominations less than five francs should be secured by keeping back in the Italian Treasury vaults an equal sum in Italian fractional silver money.

The amounts sent back to Italy were:

Since this transaction, the career of the Latin Union has been without episode. The monetary treaty to which Belgium, France, Italy, Switzerland, and Greece are parties is not partial to any of the members in particular. It survives mainly because the circumstances of the associated nations render it impossible for them to dissolve it. Switzerland, having coined but a practically insignificant amount of five-franc pieces, might step out without harm; but Italy and Belgium would be exposed to very grave embarrassment if they should be obliged to take back the five-franc pieces that France holds. As for France, she fears that by giving notice of her retirement from the Union the exchanges of her neighbors would be deranged, and she would suffer from the countershock. Notwithstanding, therefore, the precarious footing on which it stands, the Latin Union is renewed from year to year tacitly, and the probability is that it may continue for a long time to come.

[* ]Directeur du Mouvement des Fonds.