wholesale trade, a denotes 1st July, 1874; b 1st October, 1874; and c
1st January, 1875. Left of the line, a represents only the silver stand-
ard. Between a and b the gold standard has taken possession of the
The silver standard still exists in retail and wholesale trade. Between
b and c the gold standard has also been introduced into retail trade, and
the silver standard still is maintained in wholesale trade. At c the gold
standard enters into the wholesale trade and effectually displaces the
silver standard, d represents the period at which the displacement is
complete. To the right of d the gold standard governs in all three de-
This mode of introduction is practically illustrated in Hamburg coin-
age, where, as is known, the banco-mark is used in wholesale trade,
while computations in retail trade are made in the currency mark and
shillings ; and in public trade, in thalers and groschens. The groschen
was first effectively introduced in I860, for postage, telegrams, &c. If
the province of the groschen were enlarged, then practically the next
step would be to introduce it into retail trade. In that event, a con-
siderable amount of the groschen standard would come into circulation,
upon which basis wholesale trade would gradually tend to the same
In Hamburg the groschen did not formerly exist. Just as the intro-
duction of the groschen was accomplished in Hamburg, so have I recom-
mended for the last year and a half that the coin and computation rules,
in harmony with the United States, could be introduced through the
Wilhelm's thaler of 1J grams fine gold throughout Germany, first in pub-
lic trade and afterward in retail and wholesale trade.
In the next chapter I will explain the mode of introduction in detail.
THE MODE OF INTRODUCING THE GOLD STANDARD.
In (7, chart III, the mode of introducing the gold standard is repre
sented in detail, according to the common outlines as given in B.
By doubling the capacity of the mint, we would be in from one and a
half to two years able to produce about 600,000,000 pieces (equaling, say,
25,000,000 thalers) fractional currency of the Wilhelm's thaler. As soon
as three-fourths of the amount is finished, the introduction of the same
as a computation unit can commence, first in public trade, then in retail
trade, and in the course of a half year the work will be complete through-
After the half year mentioned, the present coin, the currency thaler
and gulden standard, might for a time circulate in conjunction with the
new coin of the Wilhelm's thaler, but it should be gradually displaced by
116 THEORY OF THE COIN, COINAGE, AND
the coin of the Wilhelm's thaler. According to the ratio of value of 15|
pounds silver equaling 1 pound of gold, it would rate as follows :
Thalers. Florins. Wilhelm's Cents,
14 = 24J = 10
7 = 12| = 5
Silver groscheu. Kreuzers.
42 = 2 - 27 = 1
31 J= 75
21 " = 50
10 J = 25
Besides the above exact equivalents, there are yet 1 florin and 15
kreuzers = 51 cents. At first the new coinage for South Germany need
be no higher than 25-cent pieces, and for North. Germany, up to 5 and
The present issue of 10 and 20 mark pieces contain 7.6846 grames
fine gold, and are worth in the 1J gram standard 2.39 and 4.78 Wilhelm's
thalers. They are mostly deposited in the coffers of the reserved war-
fund and in the Prussian bank, and during the period of the introduc-
tion they could be rated at 2J and 5 Wilhelm's thalers, and after the in-
troduction is complete they could be remelted into gold pieces of 3| and
7J grams. In this way, during the transition period, they would be
protected from the risk of exportation, and their remelting completely
The introduction should first be effected in public trade, because in
that the state has not only the undisputed right to fix the medium of
the money trade, but all persons who come in contact with public busi-
ness will be obliged to furnish themselves with the new coin and
familiarize themselves with it. The introduction of a new coin system is
much easier than is that of a new long and dry measure, for this reason,
that in the latter, only private parties trade one with the other, and
many prefer to retain "the old, and will not take the trouble to become
familiar with the new.
An introduction by districts is recommended, because it is neither
possible to meet the demands of the entire circulation of Germany at
once with the gold standard, nor practical at a single stroke to replace
the existing standard of calculation in the many cities and villages, con-
sisting as it does of the thaler of 30 silver groschen, of 12 pfennige, and
of the gulden and kreuzer. Besides, a knowledge of a standard must pre-
cede its introduction. Then, again, as a different rate of postage cannot
be charged, for example, in Munich, in the new standard, from that
which at the same time obtains in Wiirzburg, therefore after the entire
amount of fractional coin presumed to be necessary is prepared, it will
be known in what sums to dispense the same in the several places, in
order to supply at once the public, retail and wholesale trade.
I separate the departments of public trade into three divisions :
a. Post and telegraph trade and revenue collections.
&. Passenger and freight trade, &c., upon railroads.
c. Tolls and taxes everywhere and of all kinds, as well as all other
public incomes and disbursements.
After a sufficient amount of small coin is prepared, it may, together
with a certain amount of gold coin, be distributed according to the pop-
ulation throughout the empire. At each railroad station and post-office
MONETARY SYSTEM OF THE WORLD. 117
there should be prepared a distributing coffer, or subtreasury, charged
with the apportionment.
The first distribution should be according to the tax or voting-list ; the
after distributions of the introductory coin, and the distributions of the
subsequent coinage, may be made according to the actual necessities.
The best way to introduce the new coin into retail trade is to pay it out
in salaries, and other disbursements; 2~>,0(jN)^lt7fniTateTsTn^^ coin
would soon find its way into the hands of millions. Thus the introduc-
tion would be gradually accomplished by these departments.
For example, in the drawing 0, k signifies 1st July, 1 1st August, and
m 1st September, 1874. The first department is usually tilled with per-
sons of culture who serve as educators to the others. During the intro-
duction, the subtreasury holds in reserve a sufficient supply for the de-
partment in which the gold standard has been introduced The aggre-
gate from the post, telegraph, and revenue, amounts to about 30,000,000
thalers. In 1870, the passenger trade of the German railroads yielded
50,267,951 thalers, and the freight trade and other sources of Income
108,906,645 thalers. The amount of income from all other public sources
can be ascertained beforehand.
As soon as all business in public trade throughout Germany is con-
ducted in the new gold standard, travelers will carry none other with
them. Very soon it will prevail exclusively in restaurants and hotels,
and from thence find its way into retail trade. The latter will endeavor
to get rid of the double standard of coinage, and adopt the new standard
as soon as the government can furnish an adequate amount of coin, which
is in course of preparation. The distribution is similar in manner to
that employed in public trade. The cities have precedence, and the
country districts follow. In the drawing C
d represents Berlin, Munich, Stuttgard, Dresden, and other chief
e represents the remaining cities.
/ the country districts.
n represents, for sake of example, 1st October, 1874.
o represents, for sake of example, 1st November, 1874.
p represents, for sake of example, 1st December, 1874.
It is self-evident that the data furnished here are only for the sake of
example. As has already been remarked, the introduction into retail
trade may be accomplished all at once, if it is exactly known how much
is needed in each city and in every district. In any case, however, let
there be a large and amply sufficient reserve.
The links in the lines at fc, Z, &c., denote that the existing coin will
for a time be preferred to the new gold standard. By the circle tin un-
derstood that as soon as the new standard exists in sufficient amount,
the government determines to use it only in its public transactions.
But, besides, the circle indicates an inherent necessity in trade, to dis-
continue the use of the old silver coin, and to give preference to the new
standard as soon as a change in the form of computation becomes im-
perative. The person of the most limited intellect will find it easy to
exchange 42 silver groschen, or 2 florins 27 kreu/evs. for KM) cents at the
distributing coffer, and then, for example, pay- cents tor a letter and 10
cents to the next railroad station. Those who have no direct use for
the coin of the gold standard will yet have no difficulty in paying out
100 cents, in place of 42 silver groschen, or 2 florins i'7 kreuzers.
At the introduction of the gold standard of the AVilhelm's thaler into
public and retail trade, it will rest entirely upon the existing silver
standard. The railroads will carry their net receipts in gold, for which
118 THEORY OF THE COIN, COINAGE, AND
they at first have no other use, to the distributing coffer, and again ex-
change 14 thalers, or 24 florins, for 10 Wilhelm's thalers. The same
privilege in certain minimum amounts may be allowed to private per-
sons ; for example, country people who have received gold standard in
the market before it has been introduced into their places of residence.
The introduction of the Wilhelni's thaler in the post-office will be grat-
ifying from the tirst for this reason: that in North Germany 1 silvergro-
scheu=3i kreuzers, while in South Germany it only =3 kreuzers; this,
in any event, will be equalized. An estimate of 2 cents will furnish an
international postage basis, because 2 cents =3 kreuzers =2 sou=l penny.
The coin of the new standard will be desirable in North Germany on
account of the gain in postage which is united with it.
In order to introduce the gold standard of 1J grains into public and
retail trade, there should be ready: 1. 25,000,000 thalers in new coin; 2.
175,000,000 thalers in 20 and 10 mark pieces, presuming that the coinage
under the law of December 4, 1871, is retained as at present until April
1, 1873. 3. The present silver and paper money of the existing currency,
and gulden standard should be allowed as valid.
In order that the latter be not missed, in any event, there should be-
enough of the new standard on hand to supply the entire public and
retail trade, with silver fractional coin, in the new method of calculation,
within from a year and a half to two years after coimnencing the issue.
After the introduction has been accomplished, the mint should use its
entire power in preparing 20, 25, and 50 cents, and should call in the old
coin according to the measuring scale of the new coinage.
Until now, the question has been with regard to public and retail trade.
The first is the special province of the government, the latter requires
the assistance of the former. Fractional coin is used in large amounts.
The next question is as to the introduction of the new standard into
wholesale trade, which demands gold coin almost entirely, and which
should be allowed the issue of coin for its own advantage. So soon as
the public and retail trade are fully supplied with coin of the gold stand-
ard, the calling in of the 20-mark piece and the replacing it with gold
coin of the 1^ gram standard of full weight, should ensue, and which
coin should be issued also in pieces containing 15 and 30' grams; then
there would be, in the existing silver standard, in conjunction with the
gold standard of the Wilhelm's thaler, which until now rested upon the
silver standard, a complete parallel standard introduced into wholesale
trade, in which silver answers for gold, and gold for silver, as merchan-
dise does for money, as has been shown in a former chapter in which the
kinds of standards were treated of.
THE WILHELM'S TIIALER IN PARALLEL STANDARD.
In the delineation C, u designates 1st January, 1875, as the day upon
which the introduction into the public and private trade is provisionally
accomplished, and on which it is obligatory to completely supply the
same with the coin of the new system, and to replace the 10 and 20 mark
pieces with the new gold coin of full weight. For this purpose it is pre-
sumed that from one to one and a half years is necessary. This period
is designated by the space between u and r, and v represents the 1st Jan-
uary or the 1st July. From this period private persons might exercise
the privilege of having coin issued for their own benefit.
lit- '<! <icrimui coinage presents a new appearance. Our gold
MONETARY SYSTEM OF THE WORLD. 119
standard enters into exchange operation with tin* entire volume o
in foreign countries, and between their silver standard and ours there is
established a ratio of value corresponding to the ratio between gold and
silver in London. This forces the effectual introduction of the gold
standard into wholesale trade, because otherwise it has to deal with
various inconvenient standards, while both public and retail trade are
carried on 'through a gold standard of a common unit, and which, in
relation to foreign trade, is more agreeable and comprehensible.
For example, the manufacturer who pays his workmen in gold stand-
ard. is glad to regulate his prices in gold by America and England. and
these unconditionally give the preference to our gold standard. The
farmer prefers to sell his produce for gold, because he only desires this.
and it is immediately carried to the exchange to be traded for in gold.
Bills of exchange payable in the gold standard circulate together with
those payable in the silver standard, and the latter are discounted in
the gold standard. There arises a special discount for such gold ex-
change, whose advance is adjusted according to the demand for the
same and the supply of the gold standard. For example, if gold dis
count at 5 per cent., and the discount point for exchange in the silver
standard is 3 per cent., it is especially so because silver is abundant and
gold is scarce. Then silver flows out and gold enters ; thereby the two
points of discount are equalized ; that is, are presumably 4 per cent., so
that the other factor is not proportionately changed.
But transactions in gold, impelled by the natural power of the expan-
sion of the gold standard in public and retail trade, are again quickly
increased, and the circumstance of a rise in gold discount and of an
exchange of silver for gold is again repeated.
But apart from the fact that the introduction of the gold standard
into wholesale trade, is through the natural power of the material, there
is nothing to prevent a number of head firms upon opportunity any-
where, from occupying a place as a chamber of commerce, and constitut-
ing a banking-house to operate in gold. The first proceeding would be
a branch introduction of the gold standard, because the latter takes
possession only of certain branches of business in the same place, as in
New York, certain products are exchanged for gold dollars and cents,
and others for paper dollars and cents* and where day-book and ledger
are carried and the yearly balance made in cash of two values. The
latter proceeding would be accomplished in a local manner, and in many
cases is to be recommended.
When neither the hypothecated debtor, nor the creditor is engaged in
wholesale trade, and consequently does not operate with the silver
standard, it would be foolish for the one to exchange his gold obtained
through business for silver which he would pay over to his creditor, and
then for the latter to take the silver thus received and carry it to the
broker, to again trade it for gold. There would be no difficulty in cal-
culating the interest according to the day's quotation, and adding the
capital to the average quotation. There would be an effort to pay on"
mortgages, or to convert them into the new gold standard. Besides.
other debts would be liquidated by the payment of silver.
It is a very hazardous undertaking for the state to interfere with the
debt ratio, "in whatever way this is done, the accusation of partiality
will be made; and this reproach may be avoided, because the state has
in the mode explained by me a sate means of entirely preventing the
doubtfully authoritative encroachment upon the circumstances of debts.
Every debtor pays his silver debts in silver, but may. if he chooses, pay
them in gold. By this means the superabundant silver tlows out of the
120 THEORY OF THE COIX, COINAGE, AND
MODES ENTIRELY DIFFERENT.
The government, in its argument upon the coin laws, declares :
That it is impossible to fill the arteries of trade at once with the gold standard and
as speedily to call in the existing silver currency coin, because, in such an event, a
condition of things must take place corresponding to the so-called double standard
in so far as .the silver currency coin, previously issued, and the new gold, as equally-
constituted pay mediums, with fixed ratios of exchange, circulate together.
The assertion, "in such an event a condition of things must take
place," &c., will become weakened as soon as the entire trade is divided
into separate departments, and one department after the other is sup-
plied with the gold standard, according to the scale of amount to which
the place is entitled.
The declaration, section 8 of the coin law, that the silver currency coin
and the gold coin shall exist together as equally-constituted pay mediums,
is of small consequence to the public and retail trade, because they deal
only in small amounts and in cash payments, but of great importance to
the wholesale trade.
The coin law had reference to the entire trade, and of this especially
to wholesale trade. My mode of introduction, as previously explained,
is entirely different ; that is, introducing the gold standard first into
public and private trade, and upon this there would naturally be con-
structed a way to accomplish the same for wholesale trade.
The mode traced out by the coin law has the following defects:
1. The more valuable metal can flow off in the same w r ay as it disap-
peared in a former period of the German money history, somewhere
about 150,000,000 thalers gold. The optional, or double standard which
the coin law will use during the transition period, may become a Danai-
2. To regulate the probable outflow of gold through the circulation of
Prussian bank-notes, is a means of gain in the hands of the deputies of
3. The privilege which is granted to the debtor to pay his debts in
that metal Avhich is cheapest at the time of their contraction, places the
wholesale trade for many years upon a fluctuating basis.
4. The mode of the coin law comprehends the debt ratio only under
forced necessity. After the introduction of the pure gold standard, the
debtor will be forced to pay in imperial gold coin.
While the present legal mode of reckoning is of no benefit to him, as
the 20 gold-mark, according to the present quotation, 15.70, is w r orth.2
silvergroschen more than 6f thalers, and gold in the next year will fall
heavily below 15.50, he would be, after the entrance, forced to bear at
the farthest a great loss by yielding to the computation.
The farmer, for example, whose estate is burdened with a mortgage of
4,650 thalers, owes in this sum, taking 30 thalers to the pound, 155 pounds
in coined silver thalers. The thaler is but the measure and is only the
form in which he owes the substance of 155 pounds of silver. This debt
of 155 pounds of coined German silver, he subsequently discharges by
the payment of 10 pounds of coined German gold = 13,954 gold-marks, or
^-thaler pieces. In 1847, and 1848, gold had a value of nearly 16 : 1. At
that price, 10 pounds of gold w r ould = 160 pounds of silver, and he must
pay 5 pounds of silver more, = 150 thalers, than he owes.
5. The mode designated by the coin law originates the question, how
MONETARY SYSTEM OF THE WORLD. 121
to secure a reasonable price for our silver: Shall it remain in the hands of
Mr. von Bleichroder, and his associates, through their almost unlimited
power to establish what price is suitable to choose ?
The mode recommended by me for the introduction avoids all the ob-
stacles in the above points :
1. Gold is to us fully secured,' if we make the gold standard the exclu-
sive medium of a fixed department of trade, which then, unlike a Dnnni
den vessel, will securely retain the gold coin. Besides, the high tariff
during the introduction will make the outflow impossible.
2. Upon the second point I will take the opportunity of speaking in
detail when treating of the bank question.
3. The pure silver, or the pure gold standard, and, for the transition
period, the parallel standard, establishes a stable basis for trade. Where
the debtor has a choice of metals, many kinds of business are impossible.
4. A forcible interference with the debt ratio would be avoided. Each
one would be able to discharge his silver debts by the payment of silver.
The introduction of the gold standard into the public and retail trad*-,
and then extended gradually into wholesale trade, from that time on
enables contracts to be made in gold. At last, but few debt contracts
in silver would be left, especially the unlimited mortgages. The ques-
tion whether an unspecified time shall be fixed for the same is united
with the fifth proposition.
5. In the fourth part of my treatise on Domestic Economy, I explicitly
stated that Germany can best realize on her stock of silver by issuing
it in piasters of 22 grams fine silver with 2J grams copper alloy. This
is the value of a 5-franc thaler, and which forms the dollar of Central
America and Ecuador. Our piaster would soon take equal rank by tin*
side of the same, and it would assist us to introduce it elsewhere. Eight
piasters 1J inches in diameter (=37 millimeters), laid one by another,
is a metric foot. Ten almost equals the long measure of China, which
equals 0.37464 meter. A tael, which in China, is equal in weight and
value to silver of 898 fineness, weighs 37.573 grams; therefore 3 pias-
ters are very nearly equal to 2 taels. As Mexico sends her silver over
the earth, utilizing it everywhere, so Germany, by the use of her piaster,
would gradually be able to put her silver into circulation, and therefore
the issuing of the same would be advantageous. Besides, she would
possess in the piaster a common measure of value with other countries.
After the gold standard has for the most part taken possession of whole-
sale trade, a conversion of the remaining debt ratio of the silver standard
into the piaster may take place. The piaster is equal to 40.J silver-
groschen=2 florins 21| kreuzers=54 shillings currency. Xine pounds
of fine silver are equivalent to 200 piasters=270 currency thalers=472i
South German gulden. The debtor, who owes 155 pounds of coined
silver in 4,650 currency thalers, would not then be forced, according to
the arbitrarily received ratio of 15J:1, to pay 10 pounds of coined gold,
which, perhaps, at that time is worth 160 pounds of silver, but he would
be able to liquidate his debt by the payment of 3,444} piasters. Moreover,
as has been stated, there exists an inherent tendency in most private
obligations, to convert by voluntary agreement. The period of a com
plete supplanting of the silver standard by the gold standard is repre-
sented in drawing C by s; it will depend, however, upon the pro^iv.vs of
events and upon our future judgment.
In the same measure as my proposed unit coin is distinguished from
the mark, so is my proposed manner of Introducing the gold standard
essentially distinguished from the view taken bv the coin law.
122 THEORY OF THE COIN, COINAGE, AND
THE DANTZI3 CONGRESS AND THE BANK QUESTION.
Iii the commercial trade convention, assembled at Daiitzic, from the
23th to the 29th of August of this year, the three following resolutions
on the bank question were offered:
I. Resolution l>y Bohmert, Oenselj Lammem, and Dorn.
1. The privilege of issuing bank-notes shall depend alone upon the