Front Page Titles (by Subject) THE RESULT OF THE DISCUSSION. - The Works and Life of Walter Bagehot, vol. 5 (Historical & Financial Essays; The English Constitution)
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THE RESULT OF THE DISCUSSION. - Walter Bagehot, The Works and Life of Walter Bagehot, vol. 5 (Historical & Financial Essays; The English Constitution) 
The Works and Life of Walter Bagehot, ed. Mrs. Russell Barrington. The Works in Nine Volumes. The Life in One Volume. (London: Longmans, Green, and Co., 1915). Vol. 5.
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THE RESULT OF THE DISCUSSION.
The proposal to establish a new unit of account of 25 francs has some plausibility at first sight. There is a coin very near to it in all the most important countries. The Spanish doblon, the American half-eagle, the English sovereign are all very near to it. A decimal system of money and accounts based on this piece would be approximately intelligent wherever it is necessary. But here the merit of the scheme stops. Though like many non-French coins, it is identical with no coin; in Spain, in England, and in America, there would be a slight change to be made, and in this matter the difficulty of making a change is not to be estimated by its arithmetical magnitude. A small change may cause more difficulty than a great change. Even in France there is as yet no such coin in circulation; it has been proposed there, as a concession to foreign wishes, and especially to supposed English wishes, but it is not desired or thought of by the mass of the French. Its adoption as a unit will entail a change of every coin in the world, and of every money of account in the world, and there is, therefore, no chance of its being chosen. It would be a contrivance to combine as many difficulties as possible, and to puzzle as many people as possible.
A suggestion may, however, be founded on it. The great difficulty in all changes of coin is with the smaller coins. This is the difficulty which has prevented, and is long likely to prevent, a decimalisation of a coinage founded on the £. Twenty years ago and more the florin was struck as a first step to that scheme, and to prepare men’s minds. But we are not a bit nearer that scheme than we then were. Mr. Gladstone told a deputation that he was by no means certain “we could get rid of the penny,” and there the plan stuck. The mass of the community could not be persuaded to change the petty coins they use and reckon in; and so many tolls and charges—some belonging to private people—are assessed in the smaller coins, that we should be immersed in a complexity of compensations. No doubt it could be done, and for a great object ought to be done, but there would be endless difficulty in persuading the people to do it. On the contrary, if you retain the smaller coins, all other changes are in comparison easy; you do not require to change the habits of the mass of mankind; you address yourself to the users of valuable coins, who are in some degree educated; you can translate exactly each old sum, however small, into the coinage you propose; everybody could pay exactly what they had contracted to pay; no man’s income would be menaced, and no one’s diminished. Now, a system can certainly be devised which would keep the English small money, and also the American small money. The plan of decimal coinage known as the “farthing plan” does this. We should have to change the sovereign to 1000 farthings, or £1 0s. 10d.; now, this is almost exactly the half-eagle of five dollars. Taking the dollar at 4s. 2d., which by Act of Congress it is, the American cent is equal to an English halfpenny, and the cent therefore could be retained in the United States as a paying coin just as the halfpenny could be kept here. It would, therefore, be not only possible, it would for such a matter be even easy, to found a great Anglo-Saxon system of coins—a system of coins which would be common to both the great nations which speak the English language. And the two countries would not only obtain the advantage of uniformity—each of them would have a better coinage than it now has. America would have a high gold unit, and would reckon her vast debt and great taxation in units of suitable size; counting such large sums by dollars seems, and always must seem, like measuring their enormous territory by inches. England would have a decimal coinage and a decimal system of accounts, which now she has not, and which, as long as we keep the sovereign as our principal unit, she is not at all likely to have.
No doubt it would be long before the French and the other nations which have adopted their money would change, and adopt the Anglo-Saxon money. But still the mercantile transactions of the English-speaking race are so much greater than those of any other race; a price current that an Anglo-Saxon can effectually deal with is a price current so much more important and so much more read than a price current which only the French and the copiers of French money can readily use,—that in the course of years it is very likely that the Anglo-Saxon money would become the one money. And even before then it might be and would be largely used as the principal money of wholesale account. Every great firm in the world would quote prices in that great spreading and so to say oceanic money, as well as in its own local money. Besides it must not be forgotten that Germany will have a currency to choose; none of her many currencies are suitable to modern commerce; and she ought to have and will have, we may be sure, ere long one uniform coinage and one single money of account. It is very likely, considering her great intercourse with America and England, that she might choose to select the money which we put forward rather than that which France puts forward.
In that case, there would be one Teutonic money and one Latin money; the latter mostly confined to the West of Europe, and the former circulating through the world. Such a monetary state would be an immense improvement on the present. Yearly one nation after another would drop into the union which best suited it; and looking to the commercial activity of the Teutonic races, and the comparative torpor of the Latin races, no doubt the Teutonic money would be most frequently preferred. In this case, as in most, the stronger would daily come to be stronger, and the weaker daily be in comparison if not absolutely weaker. Probably in the end the less coinage would merge in the greater, but at any rate it would be a great step to have but two moneys, and we could well make shift to do with that if we were sure, as we should be, that there never were to be any more.
The worst objection to such a plan is the present state of the American paper currency. The metallic dollar of 4s. 2d. is superseded by the paper greenback, worth a good third less; men buy in paper, not in gold, and sell for paper too. If the two countries adjusted their metallic currencies they still would not have a monetary union, because one altogether rejects coin as a measure of value and the other adheres to it. Still we may hope that the paper depreciation of America will be temporary; the other difficulties of a monetary union will take some time to settle, and in the meantime this one may settle itself.
It is true that even after this depreciation is cured, another difficulty would remain. Though by Act of Congress the dollar is valued at 4s. 2d., in fact in real gold it is not so much; but after the immense alterations in the value of the dollar which the greenback system has introduced, it is not probable that the Americans would object to a slight change for the purpose of founding a monetary union primarily with England, and gradually we may hope with much if not all the civilised world.
America has the casting-vote in this matter. If she should in fact (as it has been said and suggested she would) join the existing monetary union, it would be useless to attempt to rival the currency of that union. It would then be supported by the principal nations of the Latin race, and by the second and the most augmenting nation of the Anglo-Saxon race; it would couple the prestige of the old Continent and that of the new. But as yet the people of the United States have never considered the “International Coinage” question any more than the people of England. When they do, it is probable that they would consider a union with England of greater importance than a union with the nations who have copied the French coinage; her transactions with us are now far more than hers with them, and as we have before said, English-speaking business grows faster than any other business. So impressed was Mr. Chase with the advantage of a common money with England, that he proposed to Congress to adopt the English sovereign. But the change to a common union founded on the five-dollar piece must be far more pleasing to American sentiment than a change to the English sovereign; and, as we have seen, it is better for us too, since any new International Coinage must be decimal, and the decimal system founded on the £ involves so much interference with “penny business” that it probably could not be carried. Besides it “stops the way” of all coinage improvement, not becoming itself more popular, but preventing Englishmen from attending to any scheme which might be popular and might be carried.
We suggest this scheme in no hostility to the 10-franc scheme. On the contrary, we think Messrs. Graham and Wilson—our Commissioners at Paris—who first suggested it, made an immense advance in “one-currency” discussion. Before that there was no proposal which gave us one real money, one money of account. Before that the suggestions went to a common coin—a 5-franc or 25-franc coin; there was no plan at all which would enable prices to be quoted alike, and bargains to be expressed alike. Nor is there any competing scheme now which could at once give us these benefits. Its advocates have a strong position; they speak on behalf of a great monetary union; they say—“We have made a great sacrifice; we have abolished our old currencies; we have adopted a new currency, do you join with us, and change your currency as we have”. It is hard to reply—“Oh, you have changed too fast; you have chosen a currency you should not have chosen; you must change again; you must make a third currency if we are to join you”. For a moment, the difficulty of inducing the present race of Frenchmen and of French imitators to disuse the franc is insuperable. Generations must pass before they will think of it, much less do it. The “10-franc” advocates have, therefore, the best of clients—a client who will consent to “nothing”; they are able by the consistent force of obstinate multitudes to say—“If you will not have our union you shall have none, for we will not consent to any other; we have just ‘built a new house’; you may or may not come and live in it; but we cannot pull it down again and begin a third house to please you”. What the answer to this is we will show in the next article.