PARIEU, Vice-President of the Conference to Clavery , Secretary, June 20, 1867

International Monetary Conference.–Third sitting.

M. de Parieu presiding. The sitting opened at 2 o’clock. Present, the delegates who were present at the second sitting, as well as M. Vrolik, and excepting the Count de Moltke Hvitfeldt.

The minutes of the preceding sitting having been adopted, the president opened the discussion on the questions 2, 3, 4, 5, 6, and 7, whieh are strictly connected together, and thus framed:

2. Is it possible to constitute at this time identities or, partial coincidences of monetary types, on an extensive scale, on the basis and with the condition of the adoption of the silver standard exclusively?

3. Is there, on the contrary, a possibility of attaining this result on the basis and with the condition of the adoption of the gold standard exclusively?

4. How much of like result in proceeding on the basis and with the condition of the adoption of the double standard and the establishment of an identity of relation in all countries between the value of gold and the value of silver?

5. In case of the negation of the three preceding questions, would it be possible and beneficial to establish identities or partial coincidences of monetary types on an extended scale on the basis of silver coins, leaving each state at liberty simultaneously to regniate the gold standard?

6. Would it be possible and beneficial to establish identities or partial coincidences on the basis of gold coins, leaving each state at liberty to regulate the silver standard?

7. On the hypothesis of the affirmative solution of one of the two preceding questions, and observing the distinctions which the alternative imports, would the advantage of internationality which coins of the metal assumed as the common standard would have, be a sufficient guarantee of their continuance in the circulation of each state, or would it be necessary beyond that to stipulate either for a certain limit in the relation between the value of gold and that of silver, or for the case where international coins would incur the risk of being completely expelled from circulation in some of the contracting states?

Mr. Mees avowed himself, for each particular state, partisan of a single standard, and, although representing a state whose system rests on the standard of silver, he did not main-fain that this standard would be that which it would be proper to adopt in preference to gold; but he could foresee serious inconvenience in all the nations of Europe adopting the same standard, for this would exclude entirely from European circulation one of the two metals, while M. Mees considered them both as beneficial to be retained. It should not be forgotten that for trade with the extreme east silver is the metal always in use; M. Mees would, there fore, be inclined to vote in the negative on the questions 2, 3, and 4, because he does not admit either the standard of silver exclusively, or the standard of gold exclusively, and he would only vote for the adoption of the two-fold standard in the event of the formation of a universal monetary union, an hypothesis whose epoch of realization cannot, as yet, be pre determined.

M. de Jacobi could not perceive any necessity for agreeing upon the adoption of one or the other standard. It would be sufficient to stipulate that such and such coins should be received and accepted as legal coins, each state remaining, in other respects, free to strike other coin in accordance with convenience or the necessities of its internal transactions.

M. Lavenay remarked that the difficulty was perhaps greater than M. Jacobi seemed to suppose it. The proposition just set forth would tend to nothing less than the establishment of the double standard in all countries. How could it be admitted, in effect, that the government of a state which should have the silver standard, which, for example, could only strike legal coin in that metal, could consent to attribute that privileged character to foreign gold coins? How could their subjects, their public banks, be obliged to accept metallic specie which it shall have prohibited in its own issues, and of which it would seem to admit implicitly the fitness?

In another point of view would not the same government have to apprehend a danger— that of bringing into the market of the country a foreign money which might drive out the national coin, and thus give preference to a metal which it has deemed fit to discard from internal circulation in that state?

Thus, in the opinion of M. Lavenay, every country which, upon economic principles, shall have adopted one standard only, could not accept the combination proposed.

M. Jacobi. Without being bound to stipulate for the employment of one and the same standard, governments might come to an understanding to coin pieces of equal value. The approximations would not present great difficulties. Thus the demi-imperial of gold varies little from the napoleon of twenty francs, and if the Russian government should coin pieces of one rouble and one-fourth, it would obtain a piece equal to the five-franc piece of France, and at the same time preserve to itself the denomination of rouble.

M. Lavenay admitted the facility with which these combinations could be attained between France and Russia, which have the double standard; and the case would not be similar between a country with the silver standard and a country with a gold standard, such, for example, as Prussia and England.

The President did not perfectly comprehend the practical bearing of the observations of Í1, Jacobi. In the opinion which prevailed at the drawing up of the questionnaire, and in which the members of the conference appeared to concur, the solution now sought for could only be found in one of the five combinations following the adoption by all the states either of the gold standard, Or the silver standard, or the double standard, or, in fine, the standard of gold, with liberty to maintain for a time the standard of silver, and reciprocally.

M. Feer Herzog indicated a certain connection between the remarks of M. Mees and those of M. jacobi. They both think that the adoption of the same standard is not indispensable to the creation of a money which shall be universal. M. Feer Herzog was not of this opinion; for the specie, be it gold or be it silver, which should be intended for universal circulation, would become a simply commercial money, from the moment of their entry into a country where the monetary standard would be of a different metal. This would fall back on the inconveniences which the conference should particularly apply itself to remove.

As for the fear expressed by M. Mees on the subject of the total disappearance of silver, in case of the adoption of the standard of gold exclusively, it did not seem to be founded on a thoroughly exact appreciation of the situation. The world is divided in its monetary relation into two considerable and very distinct groups: on one side the western States, where gold tends more and more to prevail; on the other, the countries of the extreme east, where silver continues to predominate. Commerce, which develops itself more and more between Europe and those far-off countries, cannot fail to keep up on this side a considerable circulation of silver. The adoption of a single standard in Europe and the United States would not, therefore, have the consequences which M. Mees supposes, and M. Feer Herzog regards the standard of gold alone as the basis of a true monetary union.

The President could only connect himself to a certain extent with this manner of discovering whether the conference had come to an understanding about the complete unification of monetary types; but in default of a solution so completely satisfactory, we might arrive at a specification of coincidences more or less numerous between certain types, and to obtain this result, which would not be without value, unity of standard would not be necessary. It would suffice that all the contracting states should have a common standard.

M. Baron de Hock would define somewhat further the object of the discussion after having fixed the standard as being the prototype, the rule of weight, of fineness, and of the metal of the money of a country. He recollected that the conference, in declaring at the last meeting in favor of the system of the convention of 1865, had already fixed the weight and fineness of the standard it intends to propose. It now remained for it to determine upon the metal—shall it be gold or silver? M. Hock would vote for the gold standard, and as for the double standard it did not seem to him, in the same manner as to M. Herzog, susceptible of service in the formation of a monetary union.

The Count d’Avila supported the judicious consideration developed by M. Lavenay. He did not think that countries with the silver standard could have an understanding with countries having the gold standard for the establishment of equations of their monetary types.

M. Hermann set forth the importance of looking at the question actually under discussion from the stand-point of view of the population of states which represent, on the one hand, the standard of gold or the double standard, and on the other the standard of silver.

The President reminded the meeting, on this point, that if European states only were taken into account, if abstraction was. made of Asia, the monetary circulation whereof could not be confounded with that of Europe, and whose population is besides compensated in a certain degree by the population of the American continent, the following results are obtained: One hundred and eighty millions of inhabitants in states which use the gold standard, or the double standard, against 60,000,000 in those which hold the silver standard. The decision could not be doubtful. The president having remarked that the United States were in the like situation with France,

Mr. Ruggles answered that this double standard did not practically exist, and that therefore the United States did not seem to him to be in position to be comprised among the countries having a double standard.

The original act of Congress, which was passed at a time when we were less enlightened than to-day, either by study or experience, sought to establish a double standard by giving to gold coin and silver coin equal legal currency in payments, whatever might be the amount of the debt.

In 1853, in view of the considerable change which had been experienced in the respective value of. the two metals, and which was then in the way of increase, the double standard was practically abolished by the reduction of about seven per cent, in the weight of the fractional pieces of the silver dollar, and by the declaration that all the divisional coins which should subsequently be struck should be a legal tender only for the payment of debts not; exceeding five dollars. It is true that the silver doirar is still retained as lawful money for debts of any amount, but of a total silver coinage of 136,351,512 dollars, 4,366,340 only are in dollars, while $131,985,472 consist of subdivisions of the dollar.

Almost all the divisional pieces which had been coined before the passage of the law of 1853 have disappeared, in obedience to the fundamental and inexorable law of demand and supply, which sets at naught all attempts made to fix by legislation the relative values of the two metals. The legislators and the people of the United States have sufficiently learned, if not by study, at least by experience, that the system of a double standard is not only a fallacy, but an impossibility, in assuming a fixed relation between the values of two different products, gold and silver. The value of each of these depends upon the quantity produced, and this quantity is beyond the power of legislation. A diminution of value is, and ever will be, the inevitable result of the increase of supply.

During the 56 years which immediately preceded the year 1850, the United States coined in gold $85,588,038, and in silver $75,322,969, which represents a supply of about 1 ¹²/100 of gold to one dollar of silver. From 1850 to 1866, inclusive, the coinage of gold has been $759,648,453, and of silver, $59,027.843, which represents about $12 50 in gold to one dollar of silver.

Admonished by so great a change in the relative supply of the two metals, the United States now share, without reserve, the conviction, more and more extended through the civilized world, that it is impossible to establish a double standard, which must presuppose a fixed relation between the values of the two metals.

M. Fort amps recollected that in the conferences of 1865 he had already had occasion to declare that the Belgian government, after having been the partisan of the silver standard, considered, in view of the effects which took place in the monetary circulation of Europe, the standard of gold as the only one that ought to be adopted. M. Fortamps renewed to-day that declaration.

M. Meinecke would not adopt either the second question, or the fourth, fifth, sixth, or seventh questions. He would vote for the third, that is, for the adoption of the gold standard exclusively; but must add that, for countries which, like Prussia, have the standard of silver exclusively, it would be necessary to prepare the change from one standard to the other by measures of transition. What should they be? M. Meinecke, not being furnished with any instructions* does not choose to anticipate them.

The President took note of the very important declaration which has just been made by the delegate from Prussia He added that the eventual fitness of the adoption of measures of transition was provided for in the “questionnaire.”

M. Meinecke explained that he would fear that if the terms of questions five and six should be adopted without reserve, certain states could not keep up the double standard. It would therefore be proper to restrict expressly to the period of transition the time during which the silver standard might be maintained simultaneously with the gold standard.

M. WALLENBERG stated the situation and the views of Sweden. Formerly that country had two standards—the ducat in gold, the rix thaler in silver. The value of the ducat was precisely the equivalent of two rix thalers. As for the rix thaler it was composed of ⁸⁶/100 fine silver, and corresponded with the rix thaler of Hamburg. Nine and a quarter rix thalers weighed a pound of Cologne. Each rix thaler was divided into 48 shillings, and the shilling into 12 runstycken. In consequence of the general disturbances at the beginning of the century, gold and silver disappeared,* and were replaced by notes of the state bank, having compulsory circulation. When, in 1&30, the state bank resumed payment in silver, it was wished to base the coin on the weights of the country. One law decided that silver should be coined at fineness, and that 25 rix thalers should weigh two pound Swedish. It provided at the same time that the ducat should contain ⁸⁰/82 of fine gold, and that 125 ducats should weigh one pound Swedish. It resulted from the new law that the intrinsic value of the rix thaler became a little higher than before. Formerly the pound of Cologne was equal to 9¹/4 rix thalers; it became only equal to 9 ¹/6 rix thalers. This difference, although slight, was not the less prejudicial to Sweden, considering that it has never been observed in the trade with Germany and Denmark. In this respect M. Wallenberg observed that England would take great interest in reducing the sovereign to 25 francs, as has been indicated to the conference, for the pound sterling is given in considerable quantities as the equivalent of 25 francs. Returning to the legislation of Sweden M. Wallenberg added that, from 1847 to 1854, it had been sought to introduce the metric system into the weights and measures of the kingdom, and that this had not been entirely successful in consequence of the resistance of the clerical order and of the agricultural interest; but the decimal system had been admitted, maintaining at the same time the ancient unities. Thus, as to coins, a law of 1855 had decided that the rix thaler ryxmynt should be coined of ⁷⁵/100 fineness, should weigh ²/100 of the Swedish pound, and should be divided into 200 ores. At the end of eight years, 1863, this reform was accomplished.

In brief, there exist in Sweden two standards without fixed-relative Values—the rix thaler for domestic use and with neighboring countries, the ducat for international money. M. Wallenberg expressed the opinion that monetary unifications could only be established on the basis of the gold standard exclusively, that metal offering the best qualities for circulation; the silver standard should not be preserved except during a time of transition in countries which have it at present, as Sweden has. In the opinion of the Swedish delegate, the unit of international coinage should be a piece of gold of the value of 10 francs, at ⁹/10 fineness, giving 310 pieces per kilogram, and represented in its lowest subdivision by the thousandth part, that is to say, the centime.

M. Jacobi would think proper to admit among the measures of transition to be adopted, that debtors might make their payments in one or the other metal without distinction, at the rate of the day.

The President replied that this would disavow the legal money, and would reduce the two coinages to the grade of commercial interchanges, which would not be tolerated by the population, especially in France, where they would never consent to receive money the value of which would very every day.

Mr. Vrolik thought the solution of the difficulties which are the actual subject of discussion might be found in the examination of the sixth question.

The President proposed a vote on the third question, proposing the adoption of the silver standard exclusively. The conference decided unanimously in the negative.

The discussion then opened on the third question, relative to the adoption of the gold standard exclusively.

M. Feer Heuzog mentioned M. Meinecke’s vote on the second question as being particularly important. Prussia was, in fact, the most important of the states that have the silver standard, and to vote for the adoption of an exclusive gold standard, às the delegate from that country had just done, was a declaration of very significant importance. M. Wallenberg, of Sweden, had voted in the same way. A great difficulty had thus disappeared, and now preferences can be openly declared for; he exclusive gold standard. The monetary system of Switzerland was necessarily subordinate to that of the larger neighboring states, particularly France; yet the minutes of the conference of 1865 showed that, even at that time, all the sympathies of the federal government were for the single gold standard. A similar declaration was also made at the same time by Belgium and Italy. The Swiss government had not altered its opinion since then, and it was now ready to renew the declaration, though bound by the convention of 1865. Therefore it proposed to decide the third question affirmatively. M. Feer Herzog added, that in an assembly composed of well-instructed men, like the members of this conference, he would not produce the customary arguments in favor of a gold standard, but would point out the absolute necessity of adopting the metal that constitutes the mass of the monetary reserve as the general standard.

Baron de Hock said he would vote with M. Feer Herzog in the affirmative on question third. The reason he gave for his opinion was that men pf merit have written in favor of the double standard. It was particularly asserted that the system would diminish the monetary crises, in tending to establish a sort of equilibrium between the two metals. But it is the sum total of money in circulation that influences the value of things sold, and not the relative proportion of the metals. If the amount in circulation increases, prices fall. With the double standard it is like opium—it is a useful medicinem some cases, yet nobody would use it every day, because it would then become a poison. The double standard might be very useful in financial crises, but it would be very inconvenient in general use, on account of the daily changes inibe relative value of the two metals. It exercises an evil influence on the Bourse, for the fall in stocks is always greater in countries where the double standard exists than in those where the single standard prevails. While voting for the single, gold standard, M. de Hock admits that in countries where a different system has hitherto prevailed, it might be necessary to continue the double standard, for a specified time, to be determined in advance.

The President remarked that M. Feer Herzog’s and Baron de Hock’s observations have been very pertinent to the question. The situation of the states of the convention of 1865 is not now in question, but that of Prussia, Sweden, and the Netherlands, that have the silver standard. Their situation is delicate, and we must attend to them. Should the transition period be of one or many years? If one year was fixed upon, and it was decided that debts should be paid at such a rate after that time, silver would fall and gold rise exorbitantly; therefore a year would be too short. Perhaps it would be better to leave each state, as M. Vrolik proposes, to decide upon the time when they thought proper to modify their monetary systems, and when they could do it without disturbance, that is, after gold had nearly driven silver out of circulation.

M. Meinecke thought it would be well to introduce a reserve in question third, in order to give the silver standard countries the chance of adopting the double standard temporarily, in case of an affirmative vote for the exclusive gold standard.

The President thought it essential to fix the measures of transition at once, if possible, and agreed with M. Meinecke that it is impossible to pass to the single gold standard without going through the double standard. The same opinion was expressed by Lieutenant General Mansfield, on the subject of the monetary system in India, where the silver standard prevails, which should be supplied by the double standard till the exclusive gold standard could be reached. M. Parieu added, moreover, that the best way to substitute gold for silver iti general circulation, would be to fix a certain relation between the two metals, which is the subject of question seven.

M. Mees proposed to substitute the word temporarily for simultaneously, in question six.

M. Meinecke said the words at this tone, in question two, caused his reservations.

M. Lavenay believed the general opinion of the conference to be already in favor of gold as the only standard. Admitting this, the only remaining difficulty is the transitory measures, and question third might now be decided affirmatively: and adding, “saving arrangements necessary to carry it into effect.”

M. Broch thought gold ought to be the only standard, and that the free coinage of silver ought to be prohibited in countries where that standard prevails. In some countries any person can take bar silver to the mint and have it coined at a small cost. Individuals ought to be deprived of this right; the state alone should have the privilege of coinage, and ought to limit the quantity of coin issued to so much per head. This provision ought to be made now for the five francs of the convention of 1865. If such a precaution is not taken, and a sudden revolution rendered silver, more abundant than gold in Europe, the same difficulties that now exist from the expulsion of silver would then happen inversely. So, private individuals ought only to be allowed to coin their gold.

The President thought there was an agreement upon the question of a single standard-differences only existing in regard to the mode of transition; so, to conciliate divergent opinions, he proposed the fusion of questions three and six.

M. Mees, adhering to what he said at the first of the sitting, would not vote for the adoption of question three, nor for the proposed fusion. He considered it inconvenient to adopt the gold standard everywhere, because it would reduce silver to change-money, and consequently gold would rise in value. He thought: it not desirable Ho choose between the two metals at present. Moreover, M. Mees thought a monetary union not very certain to be adopted, and that the labor of the conference, to use a figure of M. Parieu, “is only a seed sown, the germination of which cannot be foreseen.”

The President then proposed to decide question six in the affirmative, completing it by limiting the value between the two metals, as provided for in question seven.

M. Jacobi thought the question of standard not sufficiently investigated. Supposing two standards, how long would the fixed relative value between them exist? The proportion is essentially variable in theory, and there are perpetual changes in the reciprocal value of the two metals.

The President thought the result of the variations in value of, the two metals, when both are circulating, will be to drive out the more precious metal, in certain proportion, equivalent to the change in value. Even when the relation is changed, theoretically speaking, monetary circulation is not so much affected as is supposed, on account of bank deposits and private savings. There is always, a certain quantity of specie in every small place, that only circulates among its inhabitants, and never gets out of a certain circle. Great masses must be operated upon to find a profit in the exchange of metals, and the change of metals takes place slowly by successive movements.

For these reasons the general circulation is neither suddenly nor sensibly affected by changes in the relative value of metals, for France has always had much silver in circulation, even when that metal was largely exported.

M. Jacobi thought if the gold standard alone were adopted, the silver in banks would be put into circulation, gold would take its place and rise in value. He said there is scarcely any gold in Prussia, and he asked M. Meinecke if the Frederic price of gold is very variable in the Berlin market.

M. Meinecke said there are but few gold Frederics in circulation; none have been coined since 1831, except those much worn by use, and since 1857 none have been coined. It has a fixed legal circulation, so that there is no profit in recoining it.

M. Vrolik thought the transition from one system to the other would be slow; that equations and identities would have to be created between the coins; and the right granted to each state to fix the current value of the coins, as is done with the Frederics.

M. Feer Herzog said that would not be forming a monetary union, but would be maintaining what now exists in Germany in regard to the Napoleon.

M. Vrolik. thought the Napoleon would be received in banks, and not have a legal circulation.

The President said that would be going back to the double system. He then put question three to the vote.

M. LavenaY repeated M. Meinecke’s observations tending to a fusion of numbers three and six.

Baron de Hock thought the privilege of preserving the double standard for an indefinite time should not be left to any state; question three ought to be settled at once, by fixing a period of transition, as was done with question two.

M. Artom proposed to add these words to question three, “with the reservation of transitory measures.”

M. Hermann insisted that each state shall have the right to adopt any transitory measures it thinks convenient.

M. Hock thought the states should not have the choice of these measures.

M. Hermann insisting upon his opinion, Count Avila proposed to add these words to question three: “Leaving each state the liberty of keeping the silver standard temporarily.” As gold would drive out silver whenever they circulated together, this amendment should meet with no practical objection, and the temporary maintenance of the silver standard together with gold would not last long from the force of circumstances.

M. Kern would not continue the debate, but must insist on reading the instructions from his government: “If the question of the gold standard, which was rejected in the conference of 1855, is brought up, the delegates will vote as they were instructed in 1865; that Switzerland prefers the gold standard, but will be governed by the other states signing the convention of 1865.” He added, that he did not know what conclusion France will come come to, which made his situation delicate; but he thought the gold system cannot be adopted immediately; a transition period is necessary, and therefore he thought it better to complete question three with these words, “with the reserve of transitory measures,” already proposed by M. Artom, than to adopt the less general proposition of Count Avila.

Count Avila said, if the conference adopts Mr. Kern’s proposal, he is disposed to second it. He is not much interested in the transitory measures now discussed by the conference. As a representative of a country with the exclusive* gold standard, he will vote in favor of question three.

The amendment he proposed was to bring the states with a silver standard to an affirmative vote on question three. In granting the silver standard for a certain time, a general understanding would be arrived at, and a great advance would be made in monetary unification by accepting gold coins at a legal rate. For the silver standard countries that accepted the double standard would make gold the chief currency thereby, as is now the case in the states that accept the convention of 1865. In fact, in those countries the double standard exists only nominally; silver coins have become the change money, and the five-franc piece, the sole representative of the silver standard, has only a nominal existence.

The President preferred Count Avila’s proposal to M. Kern’s As transitory measures in silver standard countries are in question, we must not omit the most important of them, the provisional maintenance of the silver standard by the side of the gold standard.

Mr. Graham accepted Count Avila’s amendment, substituting the word transitorily for simultaneously in the last part of question six, annexed to question three.

Messrs. Kern, Hock, and Artom supported Count d’ Avila in this substitution of terms.

After remarking that question six is suppressed, the President put question three, thus modified, to the vote:

“On the contrary, is this result attainable on the basis and condition of adopting the exclusive gold standard, leaving each state the liberty to keep its silver standard temporarily?”

The vote was unanitnous in the affirmative, with the exception of the Netherlands.

M. Vrolik, invited by the President, explained that he voted against it because the modification goes beyond question six, where the word transitory is not found in the first draught.

This expression seemed to him to imply a time fixed in advance, and beyond which the silver standard is to give piace to the gold standard. He would have voted with the other members of the conference if each state had been left the judge of the time it should keep the double standard. If the states joining Holland come to a mutual understanding, then Holland will be forced to imitate their example.

The President proposed to continue the. discussion of question seven, questions four, five, and six having been solved negatively by the adoption of the affirmative on question three.

At the suggestion of Baron de Hock, the conference decided to meet next day, Friday, at 10 a. m., for the continuation of the debate.

The sitting adjourned at half-past 5.