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• The Works and Life of Walter Bagehot, Volume V
• A Universal Money. (1869.)
• Preface.
• The Alleged and the Real Advantages of an International Coinage.
• The Real Advantage of an International Measure of Account.
• The Conditions Which an International Coinage Should Satisfy, and the Reasons Why No Existing Coinage Fulfils Them.
• The Practical Proposals For an International Coinage.
• The Result of the Discussion.
• The Real Feasibility of Assimilating the English and the American Currencies.
• Note On Seignorage.
• Henry Crabb Robinson. 1 (1869.)
• Bad Lawyers Or Good? (1870.)
• The Earl of Clarendon. (1870.)
• Mr. Grote. 1
• On the Emotion of Conviction. (1871.)
• Mr. Lowe As Chancellor of the Exchequer. (1871.)
• The English Constitution. 1
• No. I.: Introduction to the Second Edition.
• No. II.: The Cabinet.
• No. III.: The Monarchy.
• No. IV.: The House of Lords.
• No. V.: The House of Commons. 1
• No. VI.: On Changes of Ministry.
• No. VII.: Its Supposed Checks and Balances.
• No. VIII.: The Prerequisites of Cabinet Government, and the Peculiar Form Which They Have Assumed In England.
• No. IX.: Its History, and the Effects of That History.—conclusion.

THE ALLEGED AND THE REAL ADVANTAGES OF AN INTERNATIONAL COINAGE.

The Report of the Decimal Coinage Commissioners is a very sensible, though not a very original, document. Perhaps it was not possible that so many clever men of different kinds of minds would concur in anything remarkably new. On the main point submitted to them they have arrived at a sound conclusion. They were principally asked whether it was or was not wise to alter by twopence the value of the English sovereign in order to make it equivalent to a twenty-five franc-piece, and they have reported that it would not be advisable. Instead, the Commissioners suggest that there should be a new International Congress, in which, on account of its magnitude and difficulty, the subject should be again discussed, especially with the object of investigating the very disputable proposition that the English sovereign is the best basis for an international currency. But, besides their decision, the Commissioners have given us a vast mass of excellent information, which will enable those who wish to form a sound judgment to attain it without real difficulty. As yet in England this question has never advanced to a practical stage; it has been a favourite with philosophers, it has interested individual men of business, but it has not reached common persons. Now that we have a large mass of true information easily accessible and easily intelligible, the public may begin to form a steady opinion.

What, then, are the alleged advantages of an International Coinage? They may be roughly classed thus:—First,—those which concern the convenience of travellers. Secondly,—those which relate to the exchange and transmission of coin. Thirdly,—those which relate to statistics; and, Fourthly,—those which are concerned with general trade. Either in this article or in a succeeding one we shall say a little on each of these.

As to the alleged convenience of travellers, we cannot think that now and in the policy of England it ought to have the slightest weight. No doubt cases can easily be imagined in which such a consideration would be most important. If every English county had a different coinage, the vexation to travellers would be unbearable. Twenty years ago each of the Swiss Cantons actually had such a separate coinage; and, what was worse, the coins of the same name and much the same look had different values in adjoining cantons. Batzen were one thing here and another thing there. In this very evidence, Professor Leone Levi tells us that on returning to Italy, his native country, he has seen the use of monetary reform. Formerly each of the little Italian States had a currency of its own; in the middle ages sovereigns clung hard to the prerogative of coining, for the sake of the profits of seignorage, and because, in case of need, they might ease their treasury by depreciating the standard; and on that account ancient Europe, as we may almost call it—the world before modern changes began—was encumbered with many petty coinages. But now this evil is much diminished. The progress is steady and rapid towards a few great nations and a few great currencies, and therefore travellers are inconvenienced very little. The difficulty which an Englishman finds in obtaining francs to use in France is nothing. So long as countries are large and their inhabitants numerous, no one would wish to derange the many transactions of the millions that stay at home to facilitate a little the few transactions of the hundreds who go abroad. The good to be realised is not at all equal to the evil to be incurred.

Secondly,—As to the exchanges, there is much the same objection; those who send coin abroad are so much fewer than those who use it at home; the number of exchange transactions is so infinitely less than the number of interior transactions, that it would be extravagant to trouble what is so common in order to improve what is so rare. Some persons who have not much considered the subject, and who have been not unnaturally deceived by the mode in which exchange transactions are calculated and quoted, seem to imagine that if all the world had but one coin there would be no exchange business. They see that the French exchange is expressed by saying how many francs there are in a sovereign; they see that the Indian exchange is likewise quoted by saying how many pence and shillings amount to a rupee: and therefore they fancy that if there were only one money in India, in France, and in England, no such calculations would be needed. But the principal matter would reappear in an altered form. An exchange calculation is really the cost of remitting money from one country to another. That cost is substantially the same, whether the country from which the money is exported and the country to which it is imported have the same currencies or different currencies. Australia and England have the same currencies; the sovereign is the main coin in both; but, nevertheless, there is an expense in remitting money to Australia. The remitting banks make a charge for selling their drafts, and this is the common exchange calculation in a new shape. If France and America had the same currencies as England, it would still happen as now, that bills on Paris or New York would be at a discount or a premium. The amount of money wishing to go eastward across the Atlantic, and the amount wishing to go westward, would then as now settle how much was to be paid in London for bills on New York, and how much was to be paid in New York for bills on London. The original element in exchange transactions—the remittance of money—would remain as now, and the two principal accessory difficulties would be just as great. In practical exchange business the rate of interest is to be considered, and the state of credit also. If you buy a bill at three months’ date you lose a certain sum in interest, depending on the rate for the day, and you rely on the credit, more or less good, of the parties to the bill. These main peculiarities of exchange business are fixed by its nature, and no change of currency can alter them.

There is indeed a possibility of a slight economy in coining by a single international currency. If a man export bar gold to France, unless he can sell it on terms he thinks fit, he must take it to the French mint and have it coined. But if he exported the same sum in an international currency, he could use it at once; it would be already coined to his hand. This necessity of coining sometimes at least operates as a friction in exchange transactions. A man who takes bar gold or silver to be coined in all countries loses the interest of the money during the whole process of coining, and in some he has to pay a charge besides. He therefore is not ready to export coin so soon as otherwise he would be: the premium on bills rises to a slightly greater height, and bullion does not flow quite so quickly from country to country.

These minor obstacles to exchange business would be cured by a single pervading currency, and the mere calculations would be easier. The sums to be done would be fewer and less complicated. And perhaps an increase of intelligibility might make exchange business less of a mystic knowledge,—might augment the number of those fit for it, and so lower the cost to the public of sending money from place to place. But minor improvements such as these are not sufficient to justify us in paying the price at which they are to be bought. We cannot make every one change their monetary habits or their coins to save a few clerks and dealers a few sums, or even to make money flow in and out of London half an iota more readily, or the millionth part of a farthing more cheaply. You must promise the mass of men more than that before they consent to undergo vast trouble for you.

The same may be said of statistical improvement. No doubt a common unit of value, in all civilised countries, would facilitate vastly every kind of monetary comparison. The comparative revenues, for example, of different countries would “read themselves;” you could compare the expenditure of the various countries of the world not as now, by tiresome calculation, but as easily as we can compare the accounts of the Bank of England from week to week. No statistical improvement could be comparable. But ordinary people do not care as yet, and for an indefinite period to come are not likely to care, enough about statistical science to undergo themselves daily personal annoyance for it. The change of the current coin would bore most men much, and most men care little for philosophy.

Such are the minor, and in comparison of their price almost imaginary, advantages of an international currency; the real advantages—those which make it worth while to consider whether we ought not to aim at it—are to be found in the state of trade, and we shall describe them in the next article.