RUGGLES, Delegate of the United States of America in the International Monetary Conference to William H. Seward, July 12, 1867
Mr. Ruggles to Mr. Seward
Sir: The necessary delays which have been experienced in accurate preparing and revising the proceedings of the international committee on weights, measures, and coins, which are not even yet completed, and also in reporting and printing the more formal proceedings and discussions of the international monetary conference, more directly govermental in its constitution, still prevent me from furnishing the Department of State with a full and continuous report in chronological form and order.
The printing, however, of the procès verbaux or full reports of all the proceedings and discussions of the international monetary conference was completed yesterday, and I hasten to transmit a copy herewith to the Department of State.
It will be seen that the action of the conference, though preliminary in form, practically points distinctly to a final result summed up in the five points fixed as “the basis for ulterior negotiations,” stated at the seventh page of the seventh meeting of the conference.
Copies of all the proceedings thus printed will be formally communicated to the governments of the nineteen different nations represented by delegates in the conference.
It will also be seen that the 15th of February next is fixed for a further meeting at Paris, and the reception of responses from the different governments. The 15th of May was proposed and earnestly urged on the part of the United States, to allow sufficient time for full discussion in the Congress to meet in December next, but a much earlier day having been earnestly insisted on by several of the continental nations, the 15th of February was at last adopted as a compromise.
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It is hoped and believed that the proposed establishment of the gold five francs as the “monetary unit,” to be practically identical in weight and value with the American gold dollar, when folly understood in its practical operation, and especially its consequence in the coinage of a French gold piece of 25 francs to circulate through the world side by side with the American half-eagle, will be regarded with favor by the government and people of the United States.
I have the honor to remain, with high respect, your obedient servant,
Hon. William H. Seward, Secretary of State, &c., &c., &c.
International Monetary Conference.–Fourth sitting.
M. Parieu presiding. The sitting opened at 10 o’clock. Present, the delegates of the preceding sitting and Count Moltke Hyitfeldt, with the exception of Baron Schweizer.
Count Moltke said he voted with the majority on questions two and three, which were decided during his absence, with this reserve, however, that he does not pretend to oppose the monetary system of Denmark to that of the neighboring countries with which it has most business
Baron de Hock asked permission to state why he voted for Count Avila’s amendment on the wording of question three, to which he objected at the last sitting.
As decidedly in favor of the adoption of the exclusive gold standard, he would not have hesitated to vote for question three as originally drawn up; but modifying it by M. de’Avila’s amendment, and then putting it to vote, forced him either to accept a form he did not approve of, or to vote against the gold standard; therefore he dici not hesitate to vote in the affirmative. He laid aside personal preference, so as to put no obstacle to the acceptance of the principle of the exclusive gold standard by states having the silver standard, and determined to regulate the transitory measures for its abolition, as M. Meinecke and M. Hermann say they will. M. de Hock, moreover, thought that if the new wording of article three is defective, the practical consequences will be lessened by special conventions between the states. Stipulations of a nature to limit the action of each government in regard to transitory measures might be introduced, and in discussing question seven the too general meaning of the amendment to question three might be restricted.
The President said the decision at the last sitting would be no impediment to certain transitory measures suggested by the conference, such as fixing a minimum limit to the relations between gold and silver, which is the subject of question seven.
Viscount Villa-Major thought, before examining this question, it would be better to begin by determining what present coin could be adopted as a general unity of the monetary system, and he thought it would be very well for the delegates of each state to draw up a plan of equations between their present coins and the monetary unity they would like to see adopted. These equations might serve as a basis for the proposed unification. Portugal would willingly adopt the five-franc piece as a unity, as it already has the reis at the foundation of its monetary eystem, and if its minuteness renders it defective, it has the advantage of representing with tolerable precision the thousandth part of the five-franc piece. Therefore he thought some preliminary discussion of question eight should be entertained.
The President recalled the incidental decision of the conference in favor of reducing the dollar to five francs and the sovereign to 25 francs. The question did not concern the florin and dollar countries, and therefore M. Villa-Major’s proposal would suit them. The conference could do nothing better than to agree unanimously upon the adoption of a single monetary unity, and M. Parieu believed no better piece than five francs, or one of its multiples, could be selected.
M. Wallenberg mentioned in the preceding sitting that the gold piece of 10 francs seemed to present peculiar advantages. Divide it by 1,000 and you have the centime, which is an excellent small monetary subdivision, while the five-franc piece divided by 100 gives five centimes, a too great fraction for small payments. In large transactions the 10-franc piece forms a good medium coin, a unity neither too high nor too low.
The President liked M. Wallenberg’s opinion; in fact, the piece of 10 francs, taken as a monetary unity, would be very convenient for France, as in accounts it would only be necessary to change the comma to express new unities. Formerly the 10-franc piece had a universal circulation under the name of ducat, a piece that was nearly of the same value. It was also the smallest gold piece till the five-franc piece was coined to supply the place of the silver five-franc piece, which was driven out of circulation.
M. Meinecke would not discuss the question; he thought the principal coins ought to be brought together by simple equations, each state remaining free to adopt the unity it pleases, provided its coins are easily changed to coins of other states. The principal unities would thus be assimilated, and therefore he was not authorized to pronounce in favor of fixing as monetary unity.
The PRESIDENT agreed with M. Meinecke that the coins should be easily exchanged; but there must also be a common denomination for them, and the smallest that could be conveniently adopted for gold seems to be the five-franc piece.
M. Meinecke suggested a smaller unity, two francs 50 centimes, for instance.
M. Jacobi preferred five francs, because it has whole numbers for multiples, as 10,15, 20, 25, &c., whereas the the unity of 2.50 would’ require fractional multiples.
M. Herbet remarked that the unity of 2.50 in gold would be inconvenient to coin; and he instanced the 1.25 pieces that were issued at one time in Turkey, and found too soft and too small.
M. Stas thought the remarks about monetary unity would come in better with the discussion of question eight, and added that the 2 50 unity suggested by M Meinecke would have the disadvantage of creating too many gold coins, and it would be difficult to tell them apart.
M. Kern agreed with M. Stas, and the conference determined to postpone it till question eight is discussed.
The President then read question seven:
In case of an affirmative vote on one of the two preceding questions, would the inter-nationality of the common standard coins be a sufficient guarantee of their circulation in each state; or would it be necessary to stipulate a certain limit in the relative value of gold and silver, or make provision for the case where the international metal might be expelled from circulation in any of the contracting states?
The President remarked that this question regards the organization of the transitory situation of the states that have not the gold standard. Its principal aim is to harmonize the transition measures without affecting the decision of the conference in favor of the gold standard. It is necessary to make a correct estimate of the relations between gold and silver, and if the rate of gold in Prussia and Holland were known exactly, mediums of exchange could be established that would gradually introduce gold, and expel silver from circulation, in the countries where it has served as a standard, without a financial convulsion.
M. Mees said, in Holland, if the rate of exchange continues the same as it has been for the few last years, the florin would be worth 2 francs 13 or 14 centimes, and the Napoleon 9 florins 35, or 1/3. But it is hard to say how long the present rate of exchange will be kept up. In late years the value of gold has been sustained by its great demand in France, and the proportionate expulsion of silver. At present there is no more silver in France, and gold has taken its place in circulation. The same want of gold is not felt now, and its value may diminish, particularly if it continues to be produced in considerable quantities. In such a case silver would rise; and knowing this, a state like Holland, that wishes to keep its silver circulation, would find some difficulty in fixing a definite relation between the two metals. Nevertheless, in the border provinces, the Napoleon might be rated at 9 1/3 florins, and 4 thalers at 15 francs or 7 florins of Holland, this last being equivalent to the florin of south Germany, though it has a value less than seven-thousandths. This par equality between the two florins in the Netherlands is caused by the large exportation of silver to India, the silver diminishing so fast it is necessary to coin it continually.
M. Mees added, that if the gold standard were generally adopted and became the principal agent of general circulation, the difficulty in fixing a rate between the two metals would no longer exist, because, so far from diminishing in value, gold would rise, and then there would be no danger in an approximate rate.
The President. It would be useful for the conference to examine these questions of rela-tions between the two metals; for, if a preferred currency were given to one of them in a country, it would not only affect the circulation in that state but in the adjacent countries. There are great differences in Europe between these relations in countries where the double standard exists and where these relations are fixed. Thus in Russia the relation is 1 to 15, he believes.
M. Jacobi said the relation in Russia is 1 to 15.45; it was 1 to 15 when the half-imperial was worth exactly five rubles, but it was fixed at 15.45 after the half-imperial rose to five rubles and 15 kopecs. He asked if the gold coins are to be reckoned according to their intrinsic value.
The President said the fineness must be balanced against fineness, and adds that in Russia the relation between god and silver is 1 to 15.45; in Spain from 1 to 15.48; in France 1 to 15.50; and in the United States about 1 to 16. Gold is the principal currency in this country.
M. Fortamps remarked that if the Napoleon were rated 9 1/3 florins, as M. Mees mentions, it would produce an infinitesimal fraction. In the old Netherlands the florin was worth 2 11.64 francs; since its reduction in Holland it is worth 2.10 francs, and reckoning from the value of this florin, the Napoleon would be reduced to 19 francs 60 centimes, thus losing 40 centimes. Under such circumstances gold would never circulate in Holland. What M. Mees says about the par of Holland and German florins, despite their difference in value, is true commercially but not theoretically. Now, for international coins, we must consider their intrinsic value, and not the laws of exchange.
The President thought that the valuation of the Napoleon at 9 1/3 florins, making the relation 15.19, is small, and that the minimum ought to be between 15.25 and 15.30. The particular position of Holland ought to be considered on account of its East India colonies.
M. Mees said, in Mr. Leon’s work, published in 1860, the relation is less than he proposed; it is 15.17. The kilogram of gold being worth at that time 3.460 francs, and the kilogram of silver 228 francs, we find the relation is 1 to 15.175.
M. Feer Herzog thought that is a mistake. The lowest relation was in 1859; it was then 15.21. At London, in 1860, it was 15.27, and by present quotations in Paris it is 15.46.
M. Mees answered, the relation in 1859 was an average for the whole year, and therefore M. Leon’s figures are right
M. Fortamps thought it well to arrive at a minimum relation. That proposed by M. Parieu, 15.25, is too low. It ought to be fixed at 15.45, so that a gold circulation could be established in the silver standard states. Moreover, the gold standard countries would never consent to fix the rate of silver coins, as they would thereby suffer a loss without compensation.
Baron de Hock thought that in discussing question seven we ought to fix upon something permanent. If the convention enters into the discussion of transitory measures he thought it would be best to leave them to be settled by special conventions hereafter; no inconvenience could result from that in monetary unification, for it is evident that the silver standard countries could not establish relations between the two metals so as to exclude gold from circulation without contradicting the vote given by the conference in favor of gold. Therefore he thought the establishment of these relations ought to be left to special conventions, and then each state could act as it thought best.
The President said the sub-committee proposed question seven in anticipation of the adoption of the double standard, leaving each state to continue it as long as it pleased. The conference went still further in its vote on question three, by deciding that the double standard should be transient, and ought to cease at a certain time fixed in advance. Consequently, a greater sanction is necessary to introduce gold into circulation in those states, and the opinion adopted by the conference ought to be consecrated in its consequences as in its principle. It should be declared that the relations between gold and silver ought not to be fixed below a certain minimum, to be determined by the conference. Special conventions could do it, but would not the situation of the countries concluding those treaties be better if they could rely upon a decision of the conference? To take Holland, for example, it would be easier to induce its plenipotentiaries to give up the proposed relation of 15.19 offered by M. Mees, if the conference had previously decided that the minimum relation Should be 15.25 or 15.30.
M. Feer Herzog thought the question put erroneously, and that there is antagonism between the establishment of a system of equations and the fixing of a relation. For instance, four thalers being worth 15 francs, if, with the fictitious gold thaler (3.75 cents,) the old silver thaler, which is somewhat less, is allowed to circulate, the relation will be between the weight of gold in the 15-franc piece and the weight of silver in the thaler.
M. Artom thought a relation between gold and silver may be established in two ways, namely, by equation and tarification; but he thought it easier, to proceed by equation.
M. Lavenay asked if the question of relation between the two metals is not more properly an internal than an international question. It would be international if two universal moneys were to be created, one of gold and the other of silver. In that case a relation would have to be established. But gold has been selected as the international coin, and silver will be a temporary legal currency in the states with a legal standard and a double standard. In that case all international negotiations would be transacted in gold; and whether dollars, Napoleons, sovereigns, or four-thaler pieces are received, payments will always be made in the terms and provisions of the convention. Therefore it does not seem necessary to stipulate a relation between gold and silver; for if one state establishes a bad tarification, gold will not come there, and it will keep the more inconvenient circulation of silver much longer, and the individual interest of thè state would; incline, to receive gold, but there would be no international interest.
The President replied than international money ought to have the qualities required for a serious circulation; it must circulate in the country; the advantage of internationality does not guarantee it.
M. Parieu, referring to M. Feer Herzog’s observation on equations of gold and silver coins, said it is not necessary to have a fixed relation, for, in the example quoted, four thalers equalling 15 francs, the equation embraces the idea of the existence of a relation of 15.30. It would be the same in the states of south Germany if seven florins were equal to four thalers or 15 francs. But it would not be so with Holland, where the florin is not so easily equalized, and for which a relation would have to be established.
M. Feer Herzog did not mean what M. Parieu thinks. He meant that in giving a legal circulation to the 15-franc piece at four thalers, the two-thaler gold and silver pieces, the one of 3.754, the other 3.71, must have the same value in the interior, and then the equation would be established between the gold and silver coins, although the treaty only established. the equation between gold coins.
The PRESIDENT. If an agreement were made with Prussia that 15 francs should be worth four thalers, it would be introducing the international standar 3, and its silver thaler would not be altered, as it would be rated at 15.30. The circulation of gold would no longer be prohibited, and no doubt would become of great importance. So in Bavaria, if the 15-franc gold piece circulated there for seven florins, it would be the same as fixing a relation.
M. Lavenay thought it is not of international interest to fix a minimum of relation between the two metals. What would be the use of it? It would only be introducing gold in circulation in the silver standard states. But if a legal circulation is given to gold in those states, that metal will assume the ascendency, and silver will have to circulate at its market value.
On such conditions, those states would soon discover that the best way to bring gold into circulation would be to treat it more favorably. As gold is more portable and convenient for money, it is the interest of nations to encourage its circulation both at home and abroad.
The President doubted if it is the interest of every state to encourage the circulation of gold within its limits. Holland, for instance, though its standard is different from that of its two neighbors, and its currency is different from all its neighbors, yet has a flourishing commerce, and its prosperity may continue a long time yet.
M. Jacobi thought with M. Lavenay that the best way to get a money for general circulation is to leave each state to settle the relation between the two metals. There would certainly be great differences at first, but particular tariffs would soon give way to a general tariff.
The President said it is not necessary to have a complete tariff now, but only to fix a minimum for the relation.
Mr. Stas observed that different meanings are given to the word equation in this debate, and he thought that in voting affirmatively on question three, in which the conference has decided to fix the relation at 1 to 15 ½, that relation ought to serve as a basis for equations.
The President said the affirmative vote on question three did not carry with it the idea of equation between gold and silver coins, but only between the different gold coins, and – then the vote was only on partial coincidences, and not on equations. It has, moreover, been decided that the double standard was necessary for silver standard countries as a medium of transition to reach the gold standard. Now as the relation between the two metals is different in different countries, and as gold comes in more readily when the coefficient of silver is higher, ought not a minimum to be fixed if gold is wished to be introduced? It would be vain to decide upon an international money, without fixing a relation for it with the silver money in states where the double standard was transitory. There must be some system in circulation of coin to make it permanent. The Holland ducat, so useful in travelling, only disappeared because it had no fixed relation with silver in any country, and so its existence was ephemeral: This must not be the case with the new international money.
Mr. Haindl thought the greatest difficulty for states having the doable standard, or that are to have it temporarily, would be to find the exact proportion between gold and silver during the period of transition. Steps would have to be taken for one metal to drive out the other, but care should be taken not to cause a crisis by driving out silver too suddenly. These steps can be taken only at the moment of operation, so that no limited minimum could now be fixed. If the relation is 15.19 in Holland, as M. Mees says it is, it is 15.58 in Germany at present. So each state must be left to fix that relation, which would offer no danger, as its object would be to draw gold into circulation and join the monetary union proposed by the conference as soon as silver disappeared from circulation.
M. Broch agreed wilt M. Parieu that a limited minimum is necessary for the transition period. Without such a provision, gold could not be introduced into a country that had fixed a limit too low. Thus there may be a doubt about the equation of 15 francs to four thalers, permitting gold to enter Prussia, as four thalers would have an intrinsic value below three pieces of five francs each.
The President observed that within the limits of states, sentiments wholly apart from economy often have an influence on opinions in money matters. A reform of this kind, encounters certain ideas of routine against it, certain exaggerated fears of any innovation, a singular love for certain coins. Therefore the conference should endeavor to establish rules to realize, as far as possible, the desires it has expressed in favor of the gold standard.
M. Meinecke said that as question seven is in respect to transient measures, which he cannot discuss, he and his colleague must refrain from voting.
M. Vrolik, though he agreed with M. Parieu, thought with M. Lavenay that it is better in practice to leave each state to fix its own relations. An average in exchange would soon be established between the two metals by the force of circumstances alone.
In Holland, the Napoleon would be received at 9 florins 35, which, as M. Fortamps observes, would give a relation of 35.19. Germany, as well as Holland, could receive the 15-franc pieces at 4 thalers, or 7 Bavarian florins. The 15-franc piece would then have a great circulation; it would be the connecting point between the German and French monetary systems. On the contrary, if a limited minimum relation of 15.25 or 15.30 were admitted, as M. Parieu proposes, it would be creating difficulties to a monetary unity; it is therefore better to fix nothing.
Baron de Hock, with Messrs. Lavenay, Meinecke, Haindl, Mees, and Vrólik, thought. article seven might be passed over. Though he agreed with M. Parieu in having some principle for transitory measures, he thought it difficult to fix a limited minimum relation between the two metals for the states with the silver standard. In his opinion, that would depend entirely upon their value at the time of the international conventions. In fact, if it is remarked th at gold has continued to decrease in value for the last dozen years; that during the next two years it rose; we may ask if it will continue to rise, or will fall again?
This would cause serious discussion. Some men think gold will continue to rise, because its extraction is daily becoming more expensive, and because of its great dispersion by its introduction into the monetary system of India. Among others, Mr. Soetbeer, of Hamburg, whose writings have given him a name in Germany, thinks gold has an abnormal circulation now, and that it must fall in future.
In presence of such different opinions it is difficult to fix a limited minimum of relation that would satisfy the aims of the conference. Perhaps it is better to adhere to a certain generality, and for that reason M. Hock proposed this substitute for article seven:
“The advantage of internationality which coins would acquire from the metal adopted as a common standard would not be a sufficient guarantee for keeping them in circulation in each state, but it would be necessary to stipulate also, in countries that have had the silver standard up to this time, as well as in those of the double standard, that the relation between the value of gold and silver should not be established at a rate too low to permit the serious introduction of gold.”
The President said he would willingly adopt M. Hock’s proposal for countries of a silver standard, but he doubted if it would suit countries with the double standard. The last have long had a legal relation between gold and silver, and it would be difficult to suppose they would modify their metallic relations on adopting the gold standard, so as to drive gold out of circulation.
What M. de Hock’s amendment contains, referring to countries of a double standard, might then be rescinded without inconvenience. The present debate is not on a minimum relation, but upon M. de Hock’s general proposal, that can be voted for affirmatively by the members of the conference who have not contrary instructions from their governments, without settling the question of a minimum.
M. Herbert remarked that the question will come up in the special conventions, and can then be decided by the delegates, that are qualified to do so.
On invitation of the president, M. Fortamps said, in his private opinion, a minimum relation less than 15.40 ought not to be adopted.
The President is disposed to put Baron Hock’s proposition to vote.
Mr. Ruggles asks that the vote be postponed till the next sitting, because he does not clearly see the effect of the amendment.
The President proposed to put the question to vote, and remarked that those members not prepared for the proposition, as Mr. Ruggles, who seems, however, to be alone, can withhold their vote at present and give their adhesion or refusal some other time.
M. Kern thought the debate has been long enough to give every member of the conference sufficient time to form an opinion, and says he is not disposed to go further than Baron de Hock. When such important and diverse interests are at stake, long reflection is necessary before a positive decision can be rendered. Baron de Hock’s proposition is less binding in its general terms than if it was made out in figures, as M. Parieu’s primitive idea was. It is a happy compromise of diverging opinions tending to the same end, and differing only in comprehensiveness. The vote, then, should not be deferred, as no better solution could be reached in all probability. For the good of the conference the vote ought to take place immediately.
Mr. Ruggles excused himself from voting because he does not understand the question. The United States would not consent to accept any fixed relation between gold and silver. The double standard is abolished when this relation no longer exists.
The President reminded Mr. Ruggles that the double standard still exists in the United States, and of course the relation between silver and gold, which is 1 to 16.
Mr. Ruggles answered that though the double standard still exists legislatively in the United States, it is virtually abolished in practice, and hence the United States has the gold standard alone.
The President. Reasoning in that way, as France coins a less number of five-franc pieces than America does dollars, we might say, like Mr. Ruggles, that France has the gold standard alone, and that is what nobody would assert.
M. Jacobi remarked that the United States cannot be considered as having the single gold standard any more than France, unless a new law is passed to prohibit the coinage of silver dollars.
M. Fortamps regretted that the vote is not to fix a limited minimum of tariff, and says no country with the gold standard can be forced to admit a tariff of silver coins of other countries where the silver standard is preserved.
M. de Hock’s proposal was put to vote and adopted unanimously, except by Prussia, the member from that country declaring that he cannot vote, and the member from the United States deferring his vote.
M. de Hock’s proposition having been adopted, question seven was expunged, and would not be voted on.
The discussion of article eight was deferred till the next meeting, fixed for Saturday, at 10 o’clock.
The sitting adjourned at half-past 12 o’clock, noon.