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THE LIBRARY
OF
THE UNIVERSITY
OF CALIFORNIA
RIVERSIDE
RIVERSIDE
PUBLIC LIBRARY
RIVERSIDE, CALIFORNIA
JAN 13 '120
^INTERNATIONAL
MONETARY CONFERENCES
THEIR
PURPOSES, CHARACTER, AND RESULTS
WITH
A STUDY OF THE CONDITIONS OF CURRENCY AND FINANCE
IN EUROPE AND AMERICA DURING INTERVENING
PERIODS, AND IN THEIR RELATIONS TO
INTERNATIONAL ACTION
BT -V
HENRY B. RUSSELL
NEW YORK AND LONDON
HARPER & BROTHERS PUBLISHERS
1898
u
Copyright, 1898, by HARPKII k BROTHERS.
All ri.jliti rutrtld.
PREFACE
EXCEPTING to the few who make a special study of mone-
tary science and affairs, the extensive literature pertaining
thereto, and mainly produced within half a century, is a con-
fusing jungle of conflicting opinions, isolated facts, dogmatic
arguments, and diverse conclusions. While economists dis-
cuss, governments act ; -and thus those who, by the exercise of
their political power, largely determine the conditions of a
nation's money, lacking the time, the facilities, or, perhaps,
the ability to explore the jungle for themselves, are apt to be
influenced by any special argument that falls under their eye,
or by some plausible plea of those politically artful or finan-
cially selfish, rather than by an understanding of their own,
based upon a knowledge of the practical conditions as devel-
oped by antecedent events. Even the conclusions of able and
honest disputants have been frequently vitiated by the use
made of events out of their chronological order, or in disre-
gard of their historical environment, simply for the sake of re-
inforcing an opinion or exalting a theory.
This book has been written in the belief that much of the
confusion and difference of opinion that has made the Silver
Question such a vexed one has been due to misapprehensions
arising from the study of particular events or facts without
sufficient regard to the influences which produced them. By
the application of the principle of evolution, natural science
assumed a new character. It is equally unsafe in any social
j v PREFACE
or political study to judge of a fact or of an event by itself,
severed from the soil which nurtured it, or removed from its
original atmosphere. In no study is such a method so sure
to lead to inaccurate conclusions as in that of money, which, in
its very nature, is obscurely yet firmly rooted, not simply in the
social life of nations, but in the commercial conditions of a
whole world.
An understanding of the Silver Question cannot be had
from conditions that obtain in the United States alone. The
effects, for example, of the law by which this government of-
fered sixteen pounds of silver for one pound of gold must be
studied in connection with another fact, that France was at
the same time offering a pound of gold for only fifteen and one-
half pounds of silver. A nation has its own coins, but com-
merce makes money international. Yet the tendency has been
for each nation to discuss the question of coinage from its own
standpoint, and without regard to the natural relations of its
own peculiar circumstances in the historic and international
order of affairs.
These relations are extensively disclosed in the official rec-
ords of international monetary conferences, the character of
which has affected monetary conditions to a greater degree
than has been generally considered. But the official reports of
these conferences are ill adapted to the needs of the general
reader, and, moreover, arc not complete statements; equally
unsatisfactory are other documents pertaining to the confer-
ences or to the intervening conditions which are scattered
through government reports in this country and in Europe.
It has occurred to the writer that the principal facts in relation
to these events, properly arranged and concisely stated, might
throw a stronger light on the questions in dispute, reveal the
logic of events, too often hidden in the maze of theories and
political debates, and enable a people, whose opinions give
character to legislation, and on whose judgment largely de-
PREFACE V
pend the financial strength of their government and the event-
ual determination of a monetary system, adequate and just for
the whole world, to better understand a problem which seems
destined to trouble their federal politics.
In. drawing information from a multitude of sources, the
author could not fail to appreciate the possibilities of uninten-
tionally embracing some errors of fact; but he believes the
general principles underlying the evolution of monetary condi-
tions are unmistakable. It is not intended to advance any
theory or to propose any scheme. The purpose is simply to tell
the story of the conferences, and of the intervening monetary
events of importance, as affecting conferences or as affected
by them, in part, the story of the evolution of the Silver Ques-
tion in this country and in Europe.
HENEY B. KUSSELL.
HARTFORD, December, 1897.
"There is a vicious circle: states fear to em-
ploy silver because of its depreciation, and the
depreciation continues because states refuse to em-
ploy it. Right Honorable George J. Goschen, British Dele-
gate at the Conference of 1878.
CONTENTS
CHAPTER I
SLOW DEVELOPMENT OP INTERNATIONAL COINAGE REGULATIONS THE
LATIN UNION
PAGE
Crudities of ancient coinage and commerce 1
The Renaissance 6
Early regulations and treaties 7
Financial development in America 9
Progress of the Decimal System ....... 17
Napoleon III. and his economic campaign 23
Formation of the Latin Union 26
Beginning of the fall of silver 32
CHAPTER II
GENERAL ACCEPTANCE OF THE PRINCIPLE OF THE GOLD STANDARD
CONFERENCE OF 1867
Napoleon's programme for international coinage .... 34
His overtures to the United States ....... 38
An international committee and its conclusions 46
Opening proceedings of the conference ...... 47
The question of the standard 63
Appearance of Jerome Napoleon 72
England's declaration 73
Results of the conference 81
CHAPTER III
CHANGES IN COINAGE LAWS AND MINT REGULATIONS THE DEMONETIZA-
TION OF SILVER
Agitation for international uniformity in coinage .... 87
Situation in the United States 91
The English Parliamentary Commission 101
Effects of the Franco-Prussian war 103
Revision of mint laws in the United States 109
viii CONTENTS
PAGE
German unity and coinage reform 115
Dropping the silver dollar in Congress 118
Monetary changes in Sweden and Holland 123
Germany's imperial coinage . 126
CHAPTER IV
CONTINUED LIMITATION OF SILVER COINAGE AWAKENING IN THE UNITED
STATES
Changes in the conditions of gold and silver 129
Effect of changes on European governments 137
Holland seeks aif international conference 141
Anxiety in England 147
Discovery of silver demonetization in United States . . . 151
The Silver Commission of 1876 161
The Silver Question in politics 168
Refunding and resumption 170
The Bland Bill in Congress 178
The Allison amendment and a conference 186
Conditions in the European markets 192
The silver act a blow to bimetallism 197
CHAPTER V
FIRST EFFORTS TO SECURE INTERNATIONAL BIMETALLISM THE CONFER-
ENCE OF 1878
Invitations to a conference ......... 202
Its meeting at Paris 204
The American propositions ......... 209
Position of European governments 212
Germany's responsibility for the situation 231
The action of the Latin Union 233
Appeals of the American delegates 235
The European response ......... 244
Declaration of the delegates of the United States .... 247
CHAPTER VI
SERIOUS LOSS OF GOLD BY EUROPEAN BANKS OF ISSUE THE CONFER-
ENCE OK 1881
Low reserve in the Bank of England ... ... 251
Austrian mints closed to silver 253
Germany suspends sales of silver ....... 256
France and the United States arrange for a conference . . . 269
The German declaration and its alleged concessions .... 274
The long debate 278
CONTENTS ix
PAGE
Position of the United States as to bimetallism 292
The adroit hand of England . 302
Intermission of six weeks 306
Plan of Moritz Levy of Denmark ........ 308
Offer of the Bank of England to hold silver in its reserve . . . 317
Prorogation of the conference 321
CHAPTER VII
SILVER COINAGE IN THE UNITED STATES AND PROTECTIVE MEASURES IN
EUROPE TIIE STRUGGLE FOR GOLD
Holland provides for sale of silver 326
Working of the Bland-Allison Act 327
Conditions in England and India 330
" Central European Zollverein " 333
Mission of Mantou Marble to Europe 338
An appeal from India for an agreement 341
Mission of Edward Atkinson to Europe 846
Report of the English Gold and Silver Commission .... 350
Beginning of the gold export movement from the United States . 354
Secretary Windom's plan for silver purchases 364
The Baring crisis 367
Negotiations for another conference 370
CHAPTER VIII
PROPOSED PLANS FOR A LARGER USE OF SILVER THE CONFERENCE OF
1892
The conference assembles at Brussels * . 376
Propositions of the United States 378
Statements of various governments 382
The Rothschild plan and its meaning 384
A secret committee for examining plans 388
The Levy plan 394
General discussion of bimetallism 400
Prorogation of the conference 405
CHAPTER IX
THE COURSE OF MONETARY EVENTS SINCE 1892 THE PRESENT AND THE
FUTURE
Political conditions in the United States ...... 409
The Indian Currency Commission and its report . . . .412
Closing of the Indian mints 417
Reasons for gold exports from the United States .... 423
x CONTENTS
PAGE
Repeal of the silver-purchase act 426
Passage of the Mirbach resolution in the Reichstag .... 431
House of Commons votes unanimously for a conference . . . 434
The position of France 435
" Silver craze of 1895 " in the United States 438
The election of 1896 442
Monetary changes in Russia and Japan 445
The conditions in Mexico 449
The plight of India 451
The Wolcott Commission 459
Increased gold production and the decline of silver .... 463
Possibilities of the future 464
INDEX 469
INTERNATIONAL
MONETARY CONFERENCES
CHAPTER I
SLOW DEVELOPMENT OP INTERNATIONAL COINAGE REGULATIONS. - THE
LATIN UNION
FROM the early period in the world's history when the
precious metals came into use as money until near the middle
of the present century the adoption of international regula-
tions for their coinage, circulation, or relative value did not
naturally suggest itself. With only cumbrous and slow
means of communication, crude methods of coinage, or none
at all, a commerce greatly restricted and principally by barter,
ancient states possessed little understanding of the relation of
their own economic affairs to those of their neighbors. The
principles underlying commercial exchanges had little op-
portunity to manifest themselves when tribal or national pros-
perity was commonly reckoned by the success with which am-
bitious or jealous rulers acquired by conquest the rich lands
and numerous herds of more thrifty but less warlike peoples,
either to remain as conquerors, or, returning to their original
domains with the more desirable plunder, to exact revenue in
the most convenient and portable form, till they were in turn
overcome by some similar process. Lands and herds were the
main evidences of wealth, cattle the commonest standard of
value. So far as there was any coinage, it was held as the pre-
rogative of the ruler, and was mainly confined, till recent
times, to the baser metals. There was little or no thought of
2 THE LATIN UNION
the exchangeable value of coins outside the king's domain;
for even the more civilized ancients, though refined artists and
profound reasoners did not acquire the power of careful eco-
nomic observation, and, currency being rare, few of the general
laws governing it were discovered till after the gold and silver
stores of American aborigines were poured into Europe.
Very little gold was coined in Athens or Greece proper
before the time of Alexander the Great. The amount of
money now in existence is incomparably greater than either in
classic or mediaeval times. Mines were then few, and most of
the existing treasure was locked up in the vaults of kings or
hoarded by private persons. During the time of the consuls
the leading Roman families manufactured their own coins as
they saw fit; but when the greater part of the then known
world was brought under the imperial sway of Augustus, his
vigorous arm suppressed these private operations and estab-
lished a coinage bearing the image and superscription of Caesar
through the wide extent of an empire of 120,000,000 souls. A
great increase in the use of coins followed, and there was a
marked tendency towards uniformity, tributary states seeking
to coin their metal in accordance with the Roman standard.
But the mines were not worked, and the mass of the precious
metals dwindled away to such an extent that the scarcity of
money became a serious cause of weakness to the imperial
structure. When the empire broke up, some of the conquerors
still maintained the Roman monetary system; but, little, by
little, petty chieftains, seizing the political debris, built up
small states, lay and ecclesiastical, each of them claiming the
sovereign power of coining money. Soon licenses to coin
were granted to nobles and bishops. This was pre-eminently
the case in Germany. In 910 we find Otho II., of the then
dominant Saxon line, granting such licenses to the archbishop
of Strasburg and to lesser bishops. Similar privileges were
granted under the heptarchy in England, and the practice
COINAGE OF NOBLES AND BISHOPS 3
quickly became general. Naturally, such political and eccles-
iastical conditions soon brought about the greatest dissimilarity
in coins, which were chiefly of silver and copper, and could be
struck only to a limited extent; indeed, from the fall of the
Roman empire till nearly the eleventh century, gold and silver
were rarer than they have ever been in historic times. Those
who could secure the precious metals were tempted by their
ever-increasing value and the disturbed condition of the times
either to preserve them in safer and more ornamental shape or
to adopt the villianous practice of debasing the coinage. It has
been estimated that in the days of Charles the Great the stock
of gold and silver in Europe, outside of Constantinople, was
not greater than thirty-six millions sterling.'
There was little uniformity in the estimates of the relative
value of the two metals. In Florence the coining ratio was
10| and 11 to 1; in Germany, all the way from 8 to 12 to 1;
in Flanders, 13.22 to 1 ; in England, 13.5 to 1. The ratio dif-
fered even within a single state at the same time. Anything
like exact uniformity in coins of the same nominal value was
necessarily rare in countries where the rulers, nobles, and
bishops, all coining for themselves, did not scruple to reduce
the amount of precious metal in their pieces for their own
profit, and when the best process of coinage known consisted
in placing the metal between steel dies and striking with a
hammer. It was not until late in the sixteenth century that
Antoine Brucher invented a mill, and it was considerably later
when the old methods were superseded.
An advance upon these crude methods naturally resulted
from a combination of influences beginning with the Crusades,
one of the important economic effects of which was the stimula-
tion given to commerce with the East. Although this growing
trade was carried on largely by monopolies, it led to a greater
diffusion of wealth and a wider distribution of the precious
metals. xVnother notable stimulus was given to commercial
4 THE LATIN UNION
transactions when the persecuted Jews introduced drafts
or orders. " They invented," says Montesquieu, " bills of ex-
change, -and by these means commerce was enabled to elude
violence and maintain itself, the merchants having only in-
visible wealth which could be sent anywhere, and left no trace
of its passage." These expedients were less the invention of
mediaeval Jews than their inheritance. Similar methods
probably prevailed to some extent even in Babylonian
days and in the times of Jewish national prosperity.
The scattered people carried their traditional familiarity
with money changing into mediaeval Europe, and by their
genius for finance, and because of the simplicity of the masses
in commercial matters and of the improvidence of kings and
nobles, they came to acquire nearly all the ready money by
the eleventh century. Odious to the rulers, they were no less
necessary. When placed under the sentence of perpetual ex-
communication, they could be robbed, tormented, and driven
out with impunity, but they were equal to the emergency. In
exile, they deposited their precious metals in safe hands, and
continued their trade by giving travelers secret letters or bills
of exchange to those intrusted with their wealth.
Thus commerce spread rapidly. The Germans came to
have a counting-house on the Rialto, and commercial leagues
or trades unions were formed in the growing German cities,
where commerce received another great impetus. The Ilan-
seatic League became one of the most powerful commercial or-
ganizations ever known to history, including, besides the cities
which composed it, forty-four confederate and twenty allied
cities in France, England, Elanders, Spain, and Italy, without
counting the subject towns. It had four great branches at
Bergen in Norway, Novgorod in Russia, Bruges in Belgium,
and at London. Established in 1219, primarily by German
cities for the protection of their trade, which was exposed to
both the rapacity of rulers and the attacks of pirates, it devcl-
MEDIAEVAL TRADE AND COINS
oped into an association for the consideration and promotion of
all means for the protection and advancement of its trade.
With the discovery of America and new waterways in the
fifteenth century the league began to decline, and at the last
diet, held at Lubeck in 1630, the majority of the cities re-
nounced their alliance. But while so extensive a commerce,
so long under the control of organizations of such great
power, unquestionably developed the methods of exchange,
only scant consideration was given to questions of coinage.
Commerce was still largely barter, and the precious metals
played a subordinate part in determining values. 1 When ex-
changed, it was usually by weight, while taxes, rents, and
feudal dues were paid in produce. The breaking-up of the
trade leagues was, in no small degree, due to the. increased
use of the precious metals, the greater safety of commerce
i How inconsiderable was the coinage in England before the
present century may be shown by the following statement of the
amount for each principal reign from the time of Henry III.:
1216-1272 Henry III.
1272-1307 Edward I.
1307-1327 Edward II.
1327-1377 Edward III.
1377-1399 Richard II.
1399-1413 Henry IV.
1413-1422 Henry V.
1422-1461 Henry VI.
1461-1483 Edward IV.
1485-1509 Henry VII.
1509-1547 Henry VIII.
1558-1603 Elizabeth
1603-1625 James I.
1625-1649 Charles I.
1649-1660 Cromwell
1660-1685 Charles II.
1685-1689 James II.
1689-1702 William and Mary
1702-1714 Anne
1714-1727 George I.
1727-1760 George II.
1760-1820 George III.
1820-1830 George IV.
1830-1837 William IV.
1837-(1892) Victoria
Silver.
Gold.
Total.
3,898
3,898
38,603
38,603
46,756
46,756
85,701
11,340
97,041
2,228
3,988
6,216
314
396
710
6,924
19,746
26,670
404,677
38,317
442,994
89,704
230,760
320,464
138,280
189,232
327,512
355,403
292,916
648,319
6,359,583
795,138
7,154,721
1,641,005
3,666,390
5,307,395
8,776,544
3,319,677
12,096,221
1,000,000
154,512
1,154,512
3,722,180
4,177,254
7,899,434
518,316
2,113,639
2,631,955
7,093,074
3,418,889
10,511,963
207,095
2,484,531
2,291,626
233,045
8,492,876
8,725,921
304,360
11,662,216
11,966,576
6,827,818
75,447,489
82,275,307
2,216,163
36,147,701
38,363,864
1,111,298
11,435,334
12,546,632
46,265,269
393,903,734
440,169,003
6 THE LATIN UNION
following the discovery of America, and the larger use of bills
of exchange.
The first English gold coin was not struck till the reign of
Henry III., in the latter part of the thirteenth century. No
regular gold currency was introduced till a century later, under
Edward III., and the pound sterling was not minted till 1489,
by Henry VII. The first German gold coins are said to have
been struck by Archbishop Walram, of Cologne, about 1340.
Russian coinage began late in the fifteenth century. Even
where coinage flourished it manifested the greatest variety,
was generally unfit for a standard of value, and was seldom
used as such. France during all these centuries was annoyed
by the diverse coinages of feudal sovereigns and ecclesiastics of
high and low degree, and many specimens of the coinage of sec-
ondary dukedoms and minor principalities of the various na-
tions of Europe are still extant.
The situation greatly changed when Spain brought gold
and silver from America. Up to that time the greatest wealth
consisted in land; but beginning with the sixteenth cen-
tury the Spaniards annually threw into circulation a large
quantity of both gold and silver, while at the same time valu-
able merchandise came in increasing quantities from Asia.
Europe had more money and more merchandise, an exceed-
ingly fortunate circumstance, for without the money the value
of the merchandise would have fallen, wiping out a large
amount of wealth and injuring commerce.
Finding purchasers for the merchandise, trade increased,
money began to be more widely distributed, movable fortunes
were accumulated, the bourgeoisie developed strength and im-
portance, princes began to study economic questions, nations
established closer relations, and knowledge advanced. Europe
was born again; it was the renaissance. The art of printing
was discovered, the calendar was reformed. The thirst for
knowledge and the admiration of art seized princes, popes,
THE RENAISSANCE 7
knights, monks, and burgers. Even in Germany, troubled
with religious dissensions, the poet and scholar Ulrich von
Hutten exclaimed with reference to the intellectual awaken-
ing, " How good it is to live ! " Civilization had waited long,
but when the change came it brought with it such names in
literature as Tasso, Ariosto, Montaigne, Rabelais, Cervantes,
and Shakespeare; in art, Michael Angelo, Titian, and Raphael;
in science, Copernicus and Tycho Brahe; in politics, Machia-
velli; in theology, Martin Luther. We are not apt to exag-
gerate the part that American gold and silver had in the con-
struction of the notable examples of architecture of that cen-
tury.
It is not strange that the incongruous condition of the coin-
age attracted attention in such times, and that many practical
remedies were applied within the different states. Nor is it
strange, in view of the early commercial development of the
German cities and the remarkable variety of their coins, that
the first really important efforts for international, or otherwise
mutual, coinage agreements took place among the Germans.
Members of one race, though preserving many independent
political organizations, they had evident incentives to consult
their mutual interests regarding their chaotic coinage. As
early as 1354, the three ecclesiastical electors, Mayence,
Treves, and Cologne, had entered into a coinage agreement for
" coining a common money of gold and silver in all our lands,"
but the arrangement appears to have been futile. With the
increase in metallic circulation in the fifteenth century, the
four electors of the Rhine formed a coinage union, agreeing
as to the denomination of the coins to be struck and as to means
for the protection of the coinage prerogative. In spite of re-
ligious wars and other obstacles, various agreements were made
from time to time between the petty German powers regarding
the reciprocal acceptance of coins. Such agreements were also
made at Zinna in 1667, and at Leipzig in 1690, between the
g THE LATIN UNION
electors of Saxony and Brandenburg and the House of Bruns-
\vick-Liineburg; at Vienna, in 1765, between Austria and the
elector of Bavaria; and at Worms, in 1766, between the elect-
ors of Mainz, Treves, and the Palatinate Landgrave of Hesse-
Darmstadt and the" free city of Frankfort. Provisions for the