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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 PRACTICAL PROPOSALS FOR AN INTERNATIONAL COINAGE.

We have before considered the motives which require and the principles which should regulate an International Coinage. We have now to examine the practical proposals that have been put forward: we must see how far they accord with the principles, and how far they would ensure the promised advantages. Unfortunately, according to the conclusions of our last article, every system of international coinage must be encumbered with a great evil: no existing system of coinage is at all fit for universal adoption. Whatever new one is chosen, there must be a great change in our common modes of reckoning and there is no difficulty greater than this.

The most prominent proposal is that of the Congress of Paris—to coin in this country and in others a 25-franc piece, which should circulate in all, and be a legal tender in them all. The particular coin—a 25-franc piece—is chosen, because by mere accident a coin of nearly that value is at present in circulation in several very important States. The English sovereign differs by 2d. only from that value; in France, any multiple of five francs would be intelligible, and so in Italy and Switzerland; Spain has already a nearly equal coin; Austria and Sweden are ready to strike one. The Commissioners describe the proposal in words which on account of their importance it is best to have before us. “The recommendations,” they say, “which were made by the Paris Conference, with a view of introducing gold coins which should be common to all countries, are:—

“III. That all gold coins hereafter struck in any of the countries which are parties to the Convention should either be of the value of five francs or multiples of that sum.

“IV. That a gold coin of the value of 25 francs should be struck by such countries as prefer it, and be admitted as an international coin.

“The effect of these recommendations if adopted would be to make a gold coin of five francs the basis of the international currency, and to substitute the proposed coin of 25 francs in England for the sovereign, in the United States for the half-eagle, and we presume in Spain for the doblon. In Austria and in Sweden a coin of this value would also be struck.

“As regards the coin of this country, the change, therefore, which would be required would be to diminish the quantity of fine gold contained in the sovereign by about a grain (or, more accurately, ·993 of a grain). The diminution in value would be about 2d. (more accurately, 2·126d.) in the pound, equal to ·88, or very nearly 9-10ths per cent. The existing shilling, which is only a token coin, would remain in circulation, representing 1-20th part of the new as it now does of the existing sovereign; and, in like manner, the sixpenny-piece, the penny, half-penny, and farthing would remain, representing the same parts of the new sovereign as they now do of the existing sovereign. The reduction of the value of the sovereign must practically involve that of the pound.”

But the great objection to this plan is that on the face of it; it does not attain the object. A coin of 25 francs’ value is to be universal, but nothing else is to be universal; the object, as we showed, which it was desirable to attain was the identity of money of account. Quotations were to be the same in different countries; an English merchant taking up a French newspaper was to be able to understand the money, and a French merchant taking up an English one. But the proposal from Paris does not effect this. Accounts would not be kept identically abroad and at home after the change any more than now. The French written money would still be francs and centimes; the 25-franc piece with respect to it would be what the half-crown is in the present English money of account; it would be a circulating coin, but it would not be a calculating term. If an Englishman saw that the Bank of France had 1,162,665,670 francs in its till, he would have to divide by 25 to know how much in international money that was; and he can obtain this quite nearly enough for most purposes, and the number of our present sovereigns equivalent to that sum, by the very same division. The case is still worse with the subordinate divisions. If an Englishman sees that cotton is 102 francs 50 centimes at Havre, or wheat 36 francs 50 centimes, what is he the better for the international coin? He has a sum to work to turn the printed quotation into the new coin, and if he has a sum to work he may just as well remain as now; he can turn francs and centimes into the old money just as well as into the new money.

The inconvenience of changing the value of the sovereign would be very considerable; it would be such as it would be worth while to incur for a great object, but not such as it would be wise to incur for a small one. If we are to change our currency, let us so change it that we may be intelligible to foreigners, and that foreigners may be intelligible to us. To make a slight alteration would cost most of the price, and not obtain most of the advantage.

A controversy of much delicacy has, however, been started. It is said that England does not now charge a seignorage on the coinage of gold, but that under the proposed system she might begin to do so. The difference between the new sovereign of twenty-five francs and the present sovereign is only one per cent.; we might charge one per cent. for coining the new one, and so keep the value unchanged. What was taken from the quantity might be added by the charge of the Government. But whatever be the defects or merits of this ingenious proposal, which are elsewhere discussed, it is plainly too refined for the mass of men. If you took twopence out of every sovereign you might have a mob crying, “Give us our old twopence!” and there would be no concurrence of enlightened opinion to resist the mob. On these very refined points you must never expect much agreement. Out of the many able minds which take part in the discussion, few have the knowledge, few the leisure, and still fewer the mental calmness to understand them. In this case the objection would be plain; adversaries would say, “You are defrauding the debtor by clipping the sovereign; by his contract he was to have so much gold paid him, and Parliament, without his consent, without even asking him, says he is to have less gold; Parliament might as well say that a man who had bought a hundred bales of cotton was only to have ninety bales”. Every one can comprehend this objection, but few could understand the reply, and hardly any one would feel sure about it.

Nor is it necessary to consider this refined expedient, except as a matter of principle. The proposal of the Conference of Paris that France should coin a 25-franc piece, and leave the rest of the French currency as it is, and that the English should alter their sovereign by 2d., and leave the rest of their currency as it is, must be rejected on plainer grounds. It does not give us a common money of account; it does not give us an entire common currency; it does not ensure that quotations of price should be identical; it only provides a single circulating coin.

A second plan is that which the Coinage Commissioners themselves recommend—the use of the English sovereign as an international coin. But it is not easy to believe that foreign nations would be content with a plan so simple to us and so difficult to them. If the plan is to give us what we want, it must involve a complete abolition and total disuse of the entire Continental coinage; we shall keep our principal coin, but they will lose all their coins. A mere common coin, as we have seen, be it the sovereign or the 25-franc piece, is not in itself of primary use: what is requisite is a common language of commerce—a single money of account. Now, to induce the French to reckon in sovereigns and to keep their ledgers in pounds sterling would be a most difficult task. It would be said that it was a stratagem of England to advance English interests; it would excite national jealousy and awaken inherited ill-will. No doubt, the English pound is the most important unit of account of the whole commercial world; perhaps, though this is much more disputable, the sovereign is the most important coin in the world; but a common French peasant does not know this, and would not believe this; no reasoning would bring it home to his apprehension; in spite of all arguments, he would think he was yielding to an enemy, and that he was being cheated by an enemy.

The unit suggested for an International money most contrasted with the sovereign and the 25-franc piece is that proposed by M. Chevalier. These two suggestions are founded on the notion of adhering as far as possible to existing coins, but M. Chevalier discards that principle. He says, in substance, “If you take the 25-franc piece, you will have the same difficulty out of France as if you proposed a new unit, and if you take the sovereign, you will have the same difficulty everywhere out of England; it is best to go back to principle, and take the best unit—the scientific unit; you will then have a sound reason in which all nations will concur; you will surmount the difficulty of asking one nation to concede to another; you will be better in theory, and you will not be worse in practice.” But then comes the question, what is that best,—that scientific unit? What is it that all nations will see to be inherently preferable? What is it that for its abstract merit they will be willing to choose?

To this M. Chevalier gives what we must call a French answer; he founds himself upon the metric system of weights and measures; and he alleges not only that this system is in practice more convenient, but also that it is in some way more perfect than other systems in science and theory, which indisputably it is not. There is no unit of weight or unit of measure in itself and by any intrinsic quality better than all other weights. Whatever selection you make must be arbitrary. Six yards long means six times the length of a certain rod in London; six pounds means six times the weight of a certain standard solid in London. There is nothing essentially good in this weight or this length; it happens to be fixed upon, but different ones might have been fixed upon. The French mètre is the “10,000,000th part of the quadrant of the meridian passing through France from Dunkirk to Frementara,”—which is as arbitrary a length as could be found. The French unit of weight is the gramme, which is a “cubic centimètre, or the 100th part of a metre of distilled water of the temperature of melting ice”—as arbitrary and even as curious a thing as can be imagined. The notion of most Frenchmen that there is something very scientific here is an error; it was an arbitrary choice, like any other, as good and no better than any other.

But it is upon the metric system that M. Chevalier grounds his coinage scheme. He justly says that originally the principal coin was a principal weight in some metal; the pound sterling was a real pound’s weight of silver in the beginning; so was the Livre Tournois, which down to the Revolution continued to be the great coin of France. This is the simple notion of a “coin”—some simple weight of a precious metal authenticated by Government, or in some way. M. Chevalier with great learning and great acuteness exemplifies this, as in the Chinese system and in other systems; and he argues that because the original coin was a simple weight in some metal, so the new one should be too; any fractions are an incurable defect. Thus he objects to the 25-franc piece, because when written in the metric system of weights 1-franc appears as 0·3257 grammes; and to the English sovereign, because its expression is complex too. But we cannot agree to this logic. It does not follow that the new coin ought to be a weight very simply expressible, because oldest coins in their origin were very simply expressible. The notion of a coin began so; it could not else be made intelligible to barbarians: but we are not barbarians; we know what a coin is well enough. We do not care what exact weight a sovereign is; we know it contains a certain weight of gold, because that gold is the source of its value, but we never in practice think about it. In fact, the sovereign is not easily expressible in English weights. An ounce troy coins into 3429/480 sovereigns, or 480 ounces make 1869 sovereigns, and you cannot state it more easily. But no difficulty arises; we do not think of the origin of coins; we do not care what was the relation in the first times between simple weight and primary coin. We use our sovereigns, and we do not care. We understand fractions well enough to be able to weigh great masses of sovereigns when we want. A simple equation between the unit of weight and the unit of coinage may be a theoretical advantage—a determining reason for choosing between two or more units equally convenient, but it is not a primary quality in such coins; it is not an essential requisite.

M. Chevalier’s exact proposal is that the new unit should be a piece of 10 grammes; weighing, as he says, “once and a half the volume of a piece of 20 francs”. But why ten grammes’ weight? Why not one gramme, since a gramme is the unit of weight? It seems a gramme is too small for a unit; you could not make a nice money by multiplying it and dividing it. But surely this shows plainly that the entire question is one of convenience and utility; that the “unit of weight” has no indefeasible title to be a “unit of money”; that we must judge whether it should be so by a comparison of that advantage with other advantages.

The real question is simple; it is only this: Which is more important for a new international coin—an easily expressible relation to the unit of weight of the metric system, or an easily expressible relation to present coins and present moneys of account? M. Chevalier decides in favour of the former, but we cannot agree with him. We attach no special scientific value to the French metric system; we do not think it of primary importance that the unit of value should be a simple (though arbitrary) element of the unit of weight; we regard it as very important that the new coin should be easily expressible in old coins.

The last of the most remarkable systems which have been proposed for an international coin is one of singular ingenuity. It was proposed by the present Master of the Mint—one of the English representatives at the Congress of Paris—that 10 francs should be taken as the unit of value, and that a gold piece of that value (it would be nearly 8s.) should be struck to represent it. The principal advantage of this scheme is plain. Those nations who now reckon in francs would be able after the change to reckon in francs; those who now use the French coinage, or, as we should now call it, the coinage of the International Convention, could continue to use it; the novelty is identical with a great reality. The exact scheme, and the way it seems to have suggested itself at the Congress of Paris, is thus described by its authors, the British delegates:—

“The renunciation of the principle of a currency based on a standard of silver seemed to imply and necessitate the adoption of a common unit of higher value than that at present prevailing in countries not possessing a gold standard, and the piece of five francs was that which, in spite of individual objections, found favour with the majority of the Commissioners.

“Exception was taken to it by some of the members for the practical reason of its insignificant dimensions, and upon the more theoretical ground that it does not perfectly harmonise with the decimal system.

“We shared this opinion, and were prepared to have suggested as preferable a 10-franc piece, which would not only be free from these drawbacks, but would be more likely to be acceptable in England, which is accustomed to the higher unit of the sovereign.

“A new British coin having the same quantity of gold as the 10-franc piece, with the same proportion of alloy, would be within ¾d. of 8s. in value. Such a piece could be legally introduced into circulation as an additional member of the present coinage, provided it was issued as a token coin for 8s., and made a legal tender to a limited amount only, such as £4 or ten pieces. It could have inscribed upon it ‘10 francs’ in addition to its current value of ‘8 shillings’. This coin would become the unit of computation, the new pound or metrical pound, or it might be made the tenth part of a new metrical pound, if a denomination of higher value were demanded. We would thus become possessed of an international coin.

“The scheme of coinage which it would be the means of suggesting is one resting upon the penny reduced 4 per cent. in value, and would include a silver piece of ten such pence, in addition to the gold piece of 100 pence. The ultimate adjustment of the European and American coinages contemplated would present:—

“Such a coin as the gold 8s. piece could be produced without expense, owing to the seignorage of ¾d. which it would yield as a token, and the piece could be made sufficiently distinctive by giving it a plain edge. For the issue of such a piece there is the precedent of the silver florin, which was devised to represent the pound and mil system, and to bring that system under the notice of the public. The 8s. piece proposed would represent the metrical system founded upon the penny, which has always been a rival with the former in general estimation, and which seems entitled to equal consideration at the hands of Government. The issue of such a piece, while it brought the metrical system of coinage into notice, would not be conclusive as to the ultimate adoption of that system, but would leave it possible to advance in such a course, or to recede from it at any time without embarrassment.”

As the delegates state their plan, it involves the immediate issue of an 8s. gold piece, which is to circulate with the present coins. But in this there would be much harm and no good. It would be very inconvenient to have at once in circulation pieces so alike in appearance, but so sensibly different in value, as an 8s. gold piece and a 10s gold piece; the cashiers of all banks would rebel against the puzzle, and in practice it would cause constant mistakes. The half-sovereign we must have, and so the 8s. piece would be unpopular as an introduction of the proposed coin—it would be a bad introduction. The 8s. piece would begin by creating blunders and causing plague; it would be itself unpopular, and make everything allied to it unpopular too.

But though the immediate issue of a 10-franc piece in England is out of the question, its adoption as a basis for a universal money is by no means out of the question. There is, indeed, one objection of great magnitude to it—of the greatest magnitude to English ideas—the 10-franc piece is a very low unit. The tendency of nations is to augment the scale of their transactions, and the larger the transaction the more convenient to have a high unit in terms of which to express it. The natural change is from a lower unit to a higher, and it is a going-back in civilisation to begin to count in 8s. pieces, when we have been used to count in pounds sterling. The number of figures would be greater, and the reckoning would be more difficult. To this it is replied—first, that the reckoning would be in decimals, which for all paper calculations is indisputably easier, so that the increased facility by the improvement in the mode of calculation may be set off against the augmented difficulty from the degradation of the unit; secondly, that for very large calculations the new method may easily be made better than the old. As civilisation augments and commerce extends, the sovereign may become an inconveniently small unit; indeed even now the use of it often involves an inconvenient number of figures. But 100 francs or £4 might in the new system easily serve as a “large-business unit,” and as a monetary statistical unit. It would perhaps be better than the sovereign for the last purpose, and as good as the sovereign for the first purpose.

In other respects the proposal to issue a 10-franc unit is faultless. It at once affords a basis for a universal money of account; prices could be everywhere quoted in it, just as they are now quoted in it throughout France and throughout the countries of the Convention. It thoroughly accomplishes the end, if we can but make up our mind to the means.

There still remains a proposal suggested to the Commissioners—that the 25-franc piece might be adopted in this country as a monetary unit, upon condition that France and other countries adopted it as a monetary unit too; that we should decimalise upon that basis, if they would change their unit and decimalise upon it too. But the merits and demerits of this scheme must be discussed in another article.