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THE REAL FEASIBILITY OF ASSIMILATING THE ENGLISH AND THE AMERICAN CURRENCIES. - 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 REAL FEASIBILITY OF ASSIMILATING THE ENGLISH AND THE AMERICAN CURRENCIES.
We have said that nothing can exceed the ingenuity of the “10-franc” scheme for an International money; that it is more original than any other scheme; that it promises more than any other scheme. But we fear that in practice there are too many objections to it. A responsible Minister would hardly face Parliament with it.
First. It would alter the penny, and the penny is the unit of small payments. The indistinct manner in which this grave objection has been understood by some accomplished supporters of the plan is remarkable. Thus Mr. Leone Levi, on examination before the Commission, gave Lord Halifax, the chairman, these answers:—
“376. Do you think that such a complete revolution in the coinage as that would be well received in this country?—The penny would remain, and we must remember that when the discussion was carried on about the pound and mil scheme, a very large and preponderating number of persons were in favour of the maintenance of the penny above the sovereign, and more especially of the tenpenny scheme. The difference between the tenpenny scheme formerly advocated and my proposal is, that with mine you have a gold and international unit as the basis, whilst formerly that plan seemed to imply a silver unit, without introducing any uniformity with the coins of other countries.
“377. Would not the penny be altered too?—Not in reality, because the present penny is really worth 10 centimes.
“378. One hundred pence are worth 8s. 4d.?—Yes, nominally.
“379. For that you would pay only 8s.?—Yes.
“380. There is, therefore, a difference of 4 per cent.?—Yes, the 25th part of every penny. What is contemplated is a unit of 100 pence, the relation it would bear to the present coin would, of course, be different.
“381. Your 10-franc piece would be 100 pence?—Yes, that is the basis.
“382. The 10-franc piece is equal to 8s.?—Yes, with the present penny.
“383. After the change?—No, then it will be worth 100 pence. I allow that there is some difficulty in this manner, arising from the slight change in the value of the penny, but the new 10-franc piece for the present should be issued as a token only. I consider it far easier to make that change in the penny than in the sovereign, which is the standard.
“384 I understood you to say that the penny would not be changed; would it not be changed?—Not in respect to its intrinsic value. In its relation to the present coinage it would have to be. You could take the same penny as exists now, and count it at the rate of 100 to the 10 francs, because it is not worth more.
“385. Of course its intrinsic value is much below that?—Yes; that is what I mean.
“386. But the value for which the penny is current would be reduced?—Yes.”
The truth obviously is, that all penny incomes would be taxed nearly 10d. in the £, and the owners would ask for compensation, and must have compensation. An income-tax so special and so sudden would not be borne silently. The owners of bridge tolls and ferries are not the main people; the whole system of railway carriage is based on penny charges. For example, the following are passenger charges:—
Again, the following rates are charged on a main line in Ireland, which is only an average specimen:—
These charges are often the highest the company can by law make. Any Minister who shall undertake to adjust them to a currency not expressible in pennies will have a hard task before him.
Secondly. A change to the French system of reckoning is a change that must be made at once. There can be no transition state; the two systems of reckoning cannot be used together. Neither pound, shilling, nor penny would have an exact equivalent in the new coinage or the new money of account. On a given day we must all take to francs, and abandon shillings.
Some imagine that this interval can be bridged over by the issue of an introductory coin; it is suggested “that a gold coin the value of 10 francs (which is of less value than 8s. by about three farthings) should be struck and issued as a token coin for 8s., and be made legal tender up to £4”. But no one would count or reckon in such a coin; no one would cash accounts in 8s.-pieces; no one would quote prices in them; no one think in them. We have had for years the florin as an “introductory coinage” to the “pound and mil” scheme of decimals, but we are not nearer that scheme. No one writes in “florins,” or talks in “florins”. They are pieces of 2s. and 24d., and they are no more. The 8s. token would be equally neglected in thought, and equally useless as an introduction.
In the present state of the education of Englishmen the transition state is most important. In better educated parts of the world—in North Germany, for example—it is very likely that a sudden change in the modes of reckoning could be effected, but it is not so here. A great deal of counting both on paper and in the head is done by very illiterate people; especially by women, who can do things “their own way” very well, though they cannot explain what that way is, and though very often it is not easy to tell. Many a common tradesman who now keeps or half keeps books in our present money, could not keep them at all if he were obliged to keep them in any other money. He would get “bothered”. Pence, shillings, and sovereigns seem to him indispensable, and without them he cannot get on.
The change of book-keeping would be a greater difficulty, because it would be coincident with a great change in prices. Almost all prices are expressed in pennies or fractions of a penny. Take the following list almost at random from our usual “price current”:—
These prices must be all changed, and most others too at the same moment. One would be changed to the advantage of the seller, another to his disadvantage. And just then the retail sellers of the country would be required to adopt a new mode of account-keeping. It would not be easy to many to know if they were gaining or losing, even if they reckoned in the old mode, and they would be quite at sea if they had to reckon in a new mode. The anxious country shopkeepers would be frantic, and the careless would be insolvent.
These are objections from “below,” as it were—from the world of small transactions. But there would be also great objection to the “10-franc” plan from “above”—from the world of great transactions. It would be said for our purposes—“The movement is a retrograde movement. We have a unit, the sovereign, well suited to large business, and you wish us to go back and take less than half that unit. We now reckon in 20s.-pieces, you want us to reckon in 8s.-pieces.”
For these reasons we fear we must reject the 10-franc plan. No scheme can be more ingenious; none more interesting. Every one who has dwelt on the subject must have a partiality for it. But we do not know how to face its practical difficulties; with our present education and our present trading habits we think they are invincible.
But none of these objections apply to the plan for a single currency which we might at once use, and the United States might at once use, and which Germany might soon join. That plan is to make the £ a 1000 farthings, instead of 960, and its scale would run thus in our present money:—
Every sum in the old currency would be exactly representable in the new. There would be no difficulty in penny-bridge or ferry tolls. The penny might continue to subsist as a coin, though it would not be a part of the decimal scale, just as the sou exists in France, and is the basis of countless dealings, though it is neither the tenth nor the hundredth of a franc. It could at once be written in the new money of account, just as the sou can be at once written in the present French money. All common dealings, all common quotations of prices, could go on just as well in pennies after the change as before; in prices there need be no change whatever; the new and the old would be exactly equivalent; they might be written differently on paper, but they would be the same number of pence and farthings.
What coins should be issued under the new system, and which of our present silver coins called in, would be a matter for very careful reflection; but whatever coins were selected, accounts might be kept for an indefinite time as now. If there were a piece of 2s. 1d., for example, those who chose might deal with it as they now deal with the present half-crown; they might write it as 2s. 1d. in their accounts, with £ s. d. as at present. The main difference would be that they would write the new principal coin, the universal, as we might call it, £1 0s. 10d. Any one could learn it in a day, however ignorant and however stupid.
Again, no matter which of our coins were kept, it could be written at once in the new coinage. They are all multiples of the farthing, and whatever is a multiple of the farthing can at once go down on paper in the new currency.
The rules of reduction between the old and new systems of account would be the simplest possible. To turn the old currency into the new, the rule would be—Convert the sum given into farthings, put the decimal point before the third place from the right, and the result is the sum in the new currency—thus, £185 9s. 4¾d.
one figure less to write than our present currency. To change the new currency into the old the rule would be—“Treat the entire sum as farthings, and divide by 4, 12, and 20, as usual”. To change 97·311 of new currency, we should only proceed—
again, more figures to write than the new currency.
The new unit is so near the value of the old sovereign that it is impossible to say whether it is better or worse as a unit: and the trouble of adding 10d. to every pound in old accounts is not very arduous, besides that it would be facilitated by handy tables.
The Americans would have just the same facilities at the change, subject to the minute change to bring the value of the dollar to the Congress value of 4s. 2d. All their coins—their half-eagle, their dollar, their cent—would be exactly expressible in the new coinage. Their half-eagle—their 5-dollar—would be the unit. They could keep their books as now, and they could reckon as now, if they liked, and they could change at once, and on the instant adopt the new plan if they thought that more pleasant. Each American could judge for himself.
The real objection is that after all this plan does not combine; it leaves us with two moneys; but if all the nations of the world gradually joined either the Latin coinage league or the Teutonic coinage league, trade would be very easy; and the amalgamation of these two might be left to a future and more educated age.