s 4 * 
 
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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 
 mutual acceptance of coins are found in the early treaties es- 
 tablishing the German customs-union, and gradually the coin- 
 age regulations of all the members of the union were reduced 
 to a practical system of exchangeability on a uniform basis, 
 but all sorts of coins remained in use. 
 
 Similar steps were being taken in other portions of Europe 
 for the harmonizing of the coinages of different provinces, and 
 for unifying the coinage prerogative. In the time of Louis IX. 
 there were in France over eighty barons and bishops holding 
 this prerogative by grant of the king. An agitation for depriv- 
 ing them of the right was started under Louis X., but it re- 
 sulted only in the publication of an official list of those entitled 
 to the right, though stricter provisions as to the number to be 
 stamped from the mint unit of weight and as to the imprint 
 were enforced. Gradually, under the succeeding kings, the 
 crown purchased the coinage right from those to whom it had 
 previously given it, and by the end of the fifteenth century, or 
 when gold began to come from America, the unity of the 
 coinage prerogative was wellnigh reached in France. In Eng- 
 land after the Magna Charta, the influence of Parliament 
 was directed towards such unity. 
 
 But up to the present century there was nothing like an 
 agreement between distinctly different nations attempted. 
 Each great state regarded its coinage as entirely its own busi- 
 ness, to be regulated as it saw fit and irrespective of the legal 
 ratios fixed elsewhere, except upon occasions when animated 
 by a desire to get the better of some neighboring state. With 
 the beginning of the nineteenth century the coinage systems of 
 Europe began to assume more clearly defined forms. Eng-
 
 EFFORTS FOR MONETARY REFORM 9 
 
 land, after overrating gold in her coinage all through the 
 eighteenth century, was forced by the Napoleonic wars to a 
 currency of inconvertible paper, but in 1816 established her 
 present gold standard. When the provinces of the Nether- 
 lands and Belgium were united under a single sceptre, both 
 countries had a variety of coins, for every province had claimed 
 the right of coming money; but a law was passed under Will- 
 iam L, establishing the florin as a unit. In 1838 the German 
 customs-union formed a coinage union at Dresden; in 1845, at 
 Karlsruhe, the Prussian customs-union took a similar step; and 
 in 1857 both unions united in a treaty which remained prac- 
 tically binding on all the German states till the formation 
 of the empire in 1870, although Austria, which was a party to 
 this so-called monetary union, withdrew in 1867 as a result 
 of the war with Prussia over Ilolstein. This treaty extended 
 the regulations fixed by previous agreements, and fixed for 
 the purposes of the Zollverein the relative values of the gold 
 crown, the silver thaler, and the silver florin. The issue of 
 " vereinsthalers," to have currency throughout the contract- 
 ing states, was also provided for. But none of these arrange- 
 ments could really be called international. They were agree- 
 ments between states then within the nation. 
 
 The germ of real international action as to coinage was 
 first developed in America, not by considerations for the coin- 
 age strictly, but by the scientific movement about the middle 
 of this century for uniform weights and measures and for the 
 extension of the decimal system. It was a phase of another 
 notable scientific awakening, when new economic laws were 
 laid down by Gournay, the Frenchman, and Adam Smith, the 
 Scotchman. The modern decimal system of weights and 
 measures originated in France in 1790, and nine years later 
 the prototype meter of platinum was constructed by an inter- 
 national commission representing the governments of France, 
 Holland, Denmark, Sweden, Switzerland, Spain, Savoy, and
 
 10 THE LATIN UNION 
 
 the Roman Cisalpine and Ligurian republics. While the prog- 
 ress of the system was slow outside of France, its advantages 
 suggested themselves to scientific men and leading statesmen, 
 and to none more than to those Americans influential in the 
 early constitutional history of the United States. In no coun- 
 try, perhaps, were the conditions so favorable for the intro- 
 duction of new ideas, for the government was new and the 
 people less affected by long-standing traditions. Nowhere 
 could plans of uniformity appeal so strongly to the people as 
 in the new republic, where great lack of uniformity prevailed, 
 to some extent in weights and measures, but more especially in 
 coins. 
 
 Originally and for a long period the American people used 
 the English monetary terms most extensively, but the ideas an- 
 nexed to the pound, shilling, and penny were almost as vari- 
 ous as the states themselves. Several attempts were made by 
 the Continental Congress to harmonize the different coins cur- 
 rent, and in 1778 a committee was appointed to consider the 
 state of the money and finances of the country, " and report 
 thereon from time to time." In 1782 Robert Morris, superin- 
 tendent of finance, believing it necessary for the country to 
 have a standard of its own by which to estimate the various 
 coins current, recommended the adoption of an American coin, 
 and, in view of its scientific advantages, a decimal system of 
 numeration. At the same time Jefferson added some notes 
 favoring the application of the decimal system not only to 
 money but to weights and measures. He advised that the 
 silver dollar should be made the unit of value dollars were 
 already called for in the requisitions of Congress while Mor 
 ris proposed a unit of a quarter of a grain of pure silver. 
 Jefferson's decimal plan, elaborated by the genius of Hamilton, 
 was adopted by Congress in 1792, the law decimally subdivid- 
 ing the dollar thus antedating a little the establishment of the 
 metric system in France. But it was many years before the
 
 BEGINNING OP AMERICAN COINAGE 11 
 
 people of some sections of the country could be persuaded to 
 replace their familiar reckoning in pounds, shillings, and 
 pence by that of dollars and cents; and it was practically a 
 generation and a half before a national coin came into any- 
 thing like general use. For a half -century the currency con- 
 sisted almost entirely of foreign coins and bank-notes, the 
 former forcing out national silver coins, so that in 1806 the 
 coinage of dollars was stopped, and the latter tending much of 
 the time to force out all but inferior foreign coins. Our great- 
 grandfathers were not so sentimental over the .silver dollar as 
 some of us have become in the last quarter of a century. 
 Thomas Jefferson dealt it the first blow when as President he 
 caused the following notice to be sent to the Director of the 
 
 Mint: 
 
 " Department of State, 
 
 "May 1, 1806. 
 
 " Sir: In consequence of a representation from the Directors of 
 the Bank of the United States that considerable purchases have been 
 made of dollars coined at the mint for the purposes of exporting 
 them, and as it is probable further purchases will be made, the 
 President directs that all silver to be coined at the mint shall be 
 of small denominations, so that the value of the largest pieces shall 
 not exceed half a dollar. JAMES MADISON." 
 
 Except a thousand pieces coined just thirty years after this 
 order, no more silver dollars were coined till after Andrew 
 Jackson retired from the Presidency. For nearly half a cen- 
 tury Congress devoted its consideration of the currency mainly 
 to plans for fixing the exchangeable value of foreign coins, and 
 to proposals for changing the ratio between gold and silver to 
 keep either the one or the other in circulation. 
 
 Under such conditions, the government being unable to 
 keep in circulation any coinage of its own, and the old stock- 
 ings of the people being full of old coins bearing the stamp 
 of many foreign mints, with all sorts of names and with dif- 
 ferent values in different places, the advantages of securing 
 an international uniformity in coinage could not fail to attract 
 the attention of the brighter minds. France had, meanwhile,
 
 12 THE LATIN UNION 
 
 issued invitations to the various powers to co-operate in the 
 construction and establishment of the metrical system of 
 weights and measures, and, in obedience to a resolution of the 
 United States Senate, passed in 1817, the Secretary of State, 
 John Quincy Adams, made a report strongly and brilliantly 
 advocating an international conference. While urging such 
 a conference, especially with Great Britain, Trance, and 
 Spain, which also had the subject under consideration, with the 
 main view to securing uniformity in weights and measures, he 
 added a note on the proportional value of the pound sterling 
 and the dollar, clearly showing that he appreciated the desira- 
 bility of a plan approximating the exchange values of coun- 
 tries with which we were most extensively engaged in com- 
 merce. 
 
 The conventional proportion between the pound sterling 
 and the dollar, used in commercial intercourse and sanctioned 
 by Congress, had settled the par of exchange at one pound ster- 
 ling for $4.44 in the United States, while in Great Britain it 
 was at four shillings and sixpence for the dollar. " The results 
 of the two estimates are not the same," wrote Adams; " if the 
 dollar is worth four shillings and sixpence, the pound sterling 
 is worth four dollars and forty-four cents and four mills, and 
 an endless fraction of four decimal parts. If the pound 
 sterling is worth $4.44, four shillings and sixpence, or fifty- 
 four pence, are equal only to ninety-nine cents and nine mills. 
 The difference is one mill in a dollar, or one thousand dollars 
 in a million." 
 
 Besides this, gold and silver coins, even if in practice 
 scarce, were in principle legal tender for any amount, but in 
 England silver was only legal tender in payments not exceed- 
 ing forty shillings; and by restriction of cash payments by the 
 bank, the only material in which an American merchant 
 having a debt due him in England could obtain payment was
 
 INCONGRUITIES IN EXCHANGE 18 
 
 paper of the Bank of England, while the English merchant 
 could obtain on this side either gold or silver. 
 
 Besides the incongruities pointed out by Adams there were 
 many indications of an unhealthy condition of the currency. 
 All the mint could do was to stamp bullion into convenient 
 form for exportation. The spectacle must have been hu- 
 miliating to the sagacious financiers and earnest patriots of 
 those days, but the " people " thought little or nothing about 
 it. Even so stanch a believer in Democracy, a man so de- 
 liberately plain as Jefferson, said, when speaking of the money 
 question, " The bulk of mankind are schoolboys through life." 
 As a people, the Americans were proud of their independence 
 and held it dear. Running their own government and by 
 energy and thrift making progress in their resourceful do- 
 main, they were not inclined to ask odds of any foreigner re- 
 garding forms of money. They had recently " whipped " Eng- 
 land a second time on both land and sea. They felt, and un- 
 doubtedly were, entirely competent to do it again on American 
 shores; so they viewed with little concern a thing so insidious 
 and impalpable as the loss of national specie, which they rarely 
 had seen. They had bank-notes from their own bank, and 
 were disturbed, if at all, when the bank appeared to enjoy too 
 great a monopoly. If the average member of Congress had 
 called his constituents together and asked of them their opinion 
 as to a monetary convention with Great Britain, they would 
 very likely have declared such a step entirely unnecessary, on 
 the ground that the United States could take care of them- 
 selves and the British might attend to their own affairs. Eco- 
 nomic principles have not made sufficient headway, even unto 
 this day, to entirely eliminate this so-called national feeling. 
 Characteristic, in varying degrees, of all countries, it has al- 
 ways been an obstacle to congruity in commercial arrange- 
 ments and has played an important part in preventing mone- 
 tary agreements and a uniformity in coinage. As a popular
 
 14 THE LATIN UNION 
 
 sentiment, it doubtless has been and is, so far as it remains, 
 a source of strength which any nation may be proud of, but 
 it would not have suffered in quality by a limitation of its ap- 
 plication when interfering with an intelligent appreciation 
 of the great advantages to be derived from measuring com- 
 modities and financial obligations with accuracy and honesty. 
 By 1834 the absence of specie had become sufficiently ag- 
 gravating to induce Congress to do something, and under the 
 leadership of Benton the ratio between gold and silver was 
 changed from 15 to 1 to 16 to 1. The professed, and, evi- 
 dently, real purpose of this legislation was to reinstate gold 
 in the currency. It was the deliberate intention to rate gold 
 too high, to put a premium on it, so that the product of the 
 newly discovered mines in the South might be kept in the 
 country and foreign gold might be imported. If the premium 
 simultaneously put on the exportation of silver was thought of, 
 there was no worrying over it. Congress was not uninformed 
 of the advantages of adopting a ratio in harmony with that 
 prevailing in some of the larger European states, but uniform- 
 ity was not the purpose. The adoption of the French ratio 
 was urged, some gold monometallists have held, by those who 
 simply desired silver monometallism; but, on the contrary, it 
 seems clear that it was honestly advocated with the single view 
 to uniformity. Another effort was made to secure the ratio 
 of 15.85 about the English mint ratio but that was also 
 voted down, by a majority determined, as Calhoun plainly 
 said, if any mistake were to be made, to favor gold. By mak- 
 ing the relative value 1 6 to 1 another discord was added to the 
 monetary conditions of the world with its varying ratios, ar- 
 tificially affecting the natural flux of the precious metals. If 
 the French ratio had been adopted, a closer assimilation in 
 coinage might not have followed in the next generation when 
 the subject attracted general attention, but it would have been 
 possible and probable. A coinage union with France would
 
 THE ACT OF 18M 15 
 
 have greatly changed the future course of monetary events, at 
 least, and it is doubtful if there would have been a Silver Ques- 
 tion in the nineteenth century. In his " Thirty Years' View," 
 Benton himself declared that " the French ratio was the ratio 
 of nearly all who seemed best calculated from their pursuits 
 to understand the subject; " but for other, and, as he thought, 
 practical reasons, he favored the ratio of 16 to 1, around which 
 the friends of a gold currency rallied. A slight change was 
 made in the ratio in 1837 by adding a trifle to the weight of 
 gold coins and reducing the fineness for the purpose of con- 
 forming more closely to the decimal system. It was unim- 
 portant in its effects. 
 
 There was considerable boasting over the gold coins which 
 soon made their appearance and which were popularly dubbed 
 " Benton Mint-drops " or " Jackson Yellow-boys" ; it was 
 natural to seek to make political capital of them before a 
 people which, up to that time, had seldom seen an American 
 coin. But the pleasant experience was all too brief. The 
 flight of the larger silver pieces did not appear alarming so 
 long as there were substitutes, but soon the old and worn frac- 
 tional pieces followed, and the plain people, who so admired 
 Jackson, found themselves greatly inconvenienced by a lack 
 of change, which, rather than gold, was always the medium 
 of their everyday transactions. Half-dollars, quarters, dimes, 
 and half -dimes were turned out of the mints from 1834 to 1850 
 to an amount almost as large as the coinage of gold. A few 
 silver dollars were struck something that had not occurred 
 at the mint for thirty years but everything in the shape 
 of silver was immediately exported. Matters became still 
 worse when gold began to pour into the mint from the newly 
 discovered mines of California. But for the use of small 
 notes, in varying degrees of depreciation, the domestic trade 
 and industry would have been hampered more than it was. 
 In 1851 the law creating the silver three-cent piece, three-quar-
 
 16 THE LATIN UNION 
 
 ters fine, was passed, and more than a million dollars' worth 
 were coined in three years in the effort to supply the deficiency. 
 Standard silver coins rose to a premium of 5 per cent., and the 
 total silver coinage fell from $2,558,580, in 1846, to only 
 $774,397 in 1851, and in 1852 more debased three-cent 
 pieces were coined than of all the other denominations put to- 
 gether. They alone would circulate. 
 
 The result was the law of 1853, which reduced the weight 
 of half-dollars from 206^ to 192 grains, and of the lesser coins 
 proportionally, while their legal tender was limited to sums 
 of $5, and their coinage to government account. In adopting 
 this law Congress chose, as it considered, the least objection- 
 able of two alternatives. It had either to increase the value 
 of gold in gold coins or reduce that of silver in silver coins. 
 By taking the former course the possibility of again losing 
 gold had to be faced; by taking the latter both metals might 
 be kept current, but silver would be entirely subsidiary and 
 the standard would be gold, as in England, which kept its 
 silver in circulation by debasing it. One serious objection 
 to the former course was that the coinage of gold had become 
 so great that the government could not afford to recoin so 
 much unless there appeared to be some great compensating ad- 
 vantage, and they saw none; indeed, they wanted the gold 
 standard and said so, being fully aware of what they were do- 
 ing. In introducing the bill which afterwards became the act, 
 Representative Dunham, on behalf of the Committee on "Ways 
 and Means, said: 
 
 " Another objection urged against the proposed change is that it 
 gives us the standard of gold only. What advantage is to be gained 
 by a standard of the two metals which is not as well, if not better, 
 obtained by a gold standard I am not able to perceive, while there 
 are very great advantages resulting from it, as the experience of 
 every nation which has attempted it has proved. Indeed, it is 
 utterly impossible that you should maintain a double standard. Gen- 
 tlemen talk about a double standard of gold and silver as a thing 
 that exists, and that we propose to change. We have had but a 
 single standard for the last three or four years. That has been and
 
 THE ACT OP 1853 17 
 
 is now gold. We propose to let it remain so, and to adapt silver to 
 it and regulate It by It." 
 
 It has been too commonly overlooked in recent discussions 
 that the " dollar of our daddies " was thus lightly esteemed by 
 the " daddies " themselves. With a proper understanding of 
 the manner in which the question of standards was regarded 
 in the fifties and sixties, and by carefully following the de- 
 velopment of events, the misapprehensions which have so con- 
 fused the Silver Question in recent years can be largely 
 avoided. We shall see later and the more we progress in this 
 study that apparently the human mind is quite differently 
 affected by a sudden and marked appreciation in gold and a 
 similar depreciation in silver. Governments in Europe had 
 been laboring with the same problem, and were favoring 
 practically the same course, though warned by some eco- 
 nomists that, with another flood of gold coming in from Aus- 
 tralia, gold would have to be demonetized. 
 
 But from no quarter, so far as I have been able to observe, 
 came any suggestion of an international conference or con- 
 vention to attempt the regulation of the relative value of gold 
 and silver. Each nation showed anxiety to keep its own 
 specie, too well satisfied with the new wealth of gold to take 
 any steps against it, and needing silver for change too much 
 to think of any other course than overvaluing it at the mints. 
 In order to preserve their silver they debased it, thus, in effect, 
 instituting the gold standard, a standard of the cheaper, the 
 depreciated metal. While mints were nominally open to 
 silver at old ratios, holders of bullion naturally declined to 
 convey it there to be stamped for less than it was worth. It 
 was also true that political conditions in Europe and other cir- 
 cumstances offered no inducements for international action 
 as to the ratio, had any nation requested it. 
 
 But other subjects were frequently suggested for such
 
 18 THE LATIN UNION 
 
 action, and, among them, the old one of uniform weights and 
 measures and of the decimal system, on the merits of which 
 a polemic discussion had been going on in England for some 
 time. It will now be interesting to watch the development of 
 this idea and to observe its outcome. 
 
 At the International Exhibition at London in 1851 scien- 
 tific assemblies discussed extensively a common system of 
 weights and measures, and also of coins, but nothing was done, 
 though at its close the London Society for the Encouragement 
 of Art, Industry, and Commerce informed the government 
 that it would be well to consult the neighboring nations, to 
 see if measures could not be taken to hasten the adoption of 
 a uniform system for the entire world. The International 
 Statistical Congress at Brussels, in 1853, debated the subject 
 still further, but could not agree on any proposal. At the 
 next Statistical Congress, which was held in Paris two years 
 later in connection with the Exposition, Louis Napoleon, who 
 had shortly before been declared Emperor, used his efforts to 
 secure the extension of the metric system ; but here also there 
 was a failure to agree upon a plan of concerted action, though a 
 large number from the juries and committees of the different 
 countries signed a declaration strongly urging uniformity in 
 weights, measures, and coins. 
 
 Informed of these facts and observing also the active agita- 
 tion of the subject in England by the Decimal Association and 
 others, the Congress of the United States revived the subject, 
 and in 1856 passed a joint resolution directing the Secretary 
 of the Treasury to appoint a commissioner to confer with the 
 proper functionaries of Great Britain " in relation to some plan 
 of so mutually arranging, on a decimal basis, the coinage of the 
 two countries that the respective units " should be thereafter 
 easily and exactly commensurable. The finance committee 
 of the Senate, in reporting the resolution, remarked that " no 
 measure could be readily suggested the realization of which
 
 SEEKING A CONFERENCE WITH ENGLAND 19 
 
 would mark a more decided epoch in the history of commerce." 
 It might have been possible, apparently, for the commissioner 
 appointed under this resolution to have entered into a con- 
 ference comprehending the whole question of coinage with 
 an identical relation between gold and silver coins, but the 
 decimal basis and not the ratio was the point Congress had 
 in mind at this time. A commissioner with such general in- 
 structions went to England, conferred with the Derby minis- 
 try, and, returning, reported, in January, 1859, that, " al- 
 though the British government were not prepared themselves 
 to take the initiative with reference to a project that could not 
 be carried out by them without parliamentary sanction, they 
 were prepared to consider and confer with respect to any pro- 
 posal that the commissioner might be instructed to make in be- 
 half of the government of the United States." ISTo further 
 prosecution of the negotiations resulted, and the United States 
 were soon too engrossed in serious domestic affairs to originate 
 any project for proposal. But even in the throes of civil war, 
 when our specie had completely disappeared from circulation, 
 it continued to be the subject of consideration and discussion. 
 Only a few days before the government suspended specie pay- 
 ments, Salmon P. Chase, Secretary of the Treasury, in his 
 annual report, invited the attention of Congress to the impor- 
 tance of uniform weights, measures, and coins, and to the 
 worth of the decimal system in the coinage of the world. Con- 
 gress had more important matters to think about, and England 
 was treating the cause of the Union with scant courtesy. 
 Nevertheless, Secretary Chase renewed the suggestion in 1862, 
 stating that " the present demonetization of gold may well be 
 availed of for the purpose of taking one considerable step 
 towards these great ends." 
 
 It is well to notice here the secretary's remark concerning 
 the demonetization of gold. Had it not been his understand- 
 ing, as it was of every one else after the act of 1853, that gold
 
 20 THE LATIN UNION 
 
 was the standard, he would naturally have coupled silver with 
 gold in his statement referring to demonetization by the sus- 
 pension of specie payments or by exportation. The theory of 
 ^ the gold standard was accepted by common consent and was 
 not conceived in ignorance or in malice towards silver. The 
 secretary evidently had only the possibilities of gold in mind 
 in all he had to say upon the subject. " If," he continued, 
 " the half-eagle of the Union be made of equal weight and 
 fineness with the gold sovereign of Great Britain, no sensible 
 injury could possibly arise from the change, while, on resump- 
 tion of specie payments, its great advantage would be felt in 
 the equalization of exchange and the convenience of com- 
 merce. This act of the United States, moreover, might be fol- 
 lowed by the adoption by Great Britain of the federal deci- 
 mal divisions of coin, and thus a most important advance might 
 be secured towards an international coinage with values deci- 
 mally expressed." 
 
 That commercial bodies and the government of the United 
 States, even in a severe civil strife, should have continued to 
 advance these propositions is not, perhaps, so strange as it 
 seems, for they were being agitated in Europe, and an eco- 
 nomic opinion in their favor was fast crystallizing. Attention 
 had been drawn to them in Germany in the discussion over the 
 monetary treaty of 1857, already referred to, a discussion 
 which was the beginning of that movement for monetary re- 
 form culminating in 1873. The International Statistical 
 Congress at Vienna in 1859 made another declaration in favor 
 of uniformity, and in 1862 the English House of Commons 
 went so far as to appoint a committee, and, on its report, the 
 metric system was made legal and optional. There was some 
 talk of instituting decimal coinage, but the matter was con- 
 sidered premature. By 1862, when Secretary Chase made his 
 recommendations, the advocacy of the reduction of existing 
 units of money to a small number on a decimal basis had be-
 
 INTERNATIONAL UNIFORMITY IN COINAGE 21 
 
 come quite general among commercial bodies and economists. 
 Another Statistical Congress, held at Berlin in 1863, at which 
 the nations were generally represented, voted unanimously 
 that the different governments " be invited to send to a special 
 congress delegates authorized to consider and report what 
 should be the relative weights in the material system of gold 
 and silver coins, and to arrange the details by which the mone- 
 tary system of different countries " might be fixed, upon a 
 single unit decimally subdivided. 
 
 This congress, though not convened to consider monetary 
 questions especially, may be regarded as the starting-point 
 in international deliberations on the subject. No general as- 
 sembly of nations by delegates duly accredited had ever before 
 been held in which the question of general monetary unifi- 
 cation had been so openly and seriously discussed. Before 
 that the advocacy of unification had been principally confined 
 to weights and measures, but in 1863 that phase of it was 
 subordinated to uniform coinage and wellnigh laid aside. The 
 representative of the United States was Samuel B. Ruggles, 
 a leading member of the New York Chamber of Commerce, a 
 statistician and economic student of high repute in this coun- 
 try. He found at Berlin a large and influential delegation 
 from Great Britain zealously engaged in an endeavor to unify 
 the money of the world. A special committee composed of 
 delegates of fourteen different governments was appointed to 
 consider the subject, and it made an elaborate report, mainly 
 prepared by Samuel Brown and Prof. Leone Levi, of King's 
 College, London, recommending the decimalization of the 
 pound sterling and the making of it a monetary unit. It 
 further proposed in respect to silver coins that the dollar, re- 
 duced in value to 5 francs, the florin, made equal in value to 2-J 
 francs, and the franc itself should be units, all of them deci- 
 mally subdivided. The delegates of the United States objected 
 to the adoption of the four units, mainly on the ground that it
 
 22 THE LATIN UNION 
 
 would tend to preserve the double standard of gold and silver, 
 and thus, to use his words, " prolong the vain attempt to fix by 
 legislative enactment the relative value of the two metals, in 
 their nature necessarily mutable and governed only by the 
 fundamental law of supply and demand." In the course of 
 the discussion, a suggestion was made by Dr. Farr, Register- 
 General of the United Kingdom, and one of the most dis- 
 tinguished of the British delegates, that the gold dollar of 
 the United States should be made equal to one-fifth of the Eng- 
 lish sovereign. To this Ruggles replied in behalf of the 
 United States that both the sovereign and the half -eagle should 
 be reduced to the value of 25 francs, thereby unifying at once 
 the gold coinage of the three nations. The difference of opin- 
 ion on this point between the delegates of Great Britain and of 
 tho United States led the Congress to adjourn without making 
 more than a general declaration and asking for a special con- 
 gress to devise a plan. Had England's proposition been ac- 
 cepted at this moment, when the enthusiasm of some of her 
 leading men was at its height, it might in time have led to 
 international bimetallism and changed the whole course of 
 monetary events. But the sentiment for a single gold stand- 
 ard had gained too much headway, especially among the nomi- 
 nally bimetallic states. 
 
 This gradual movement towards international action on the 
 money question was stimulated by various conditions in differ- 
 ent countries. Moreover, the period from 1850 to 18G5 was 
 one of earnest scientific thought everywhere, and largely upon 
 new lines. We cannot fail to distinguish points of similarity 
 between this time and the period of the renaissance in the six- 
 teenth century, the latter following the influx of precious 
 metals from the !N"ew World, and the former following the 
 most remarkable increase of gold production in history. A 
 new drift had been given to thought by the writings of such 
 men as Darwin, Huxley, Tyndall, and Spencer. There was
 
 ANOTHER RENAISSANCE 23 
 
 a disposition to find a scientific basis and an evolutionary rea- 
 son for everything even the world's monetary systems. 
 Nothing but the logical would hold, and the double standard 
 seemed illogical. It was believed, also, that the double stand- 
 ard had failed in practice, though with such diversity in de- 
 creed ratios it could hardly be otherwise. At this same period 
 the world recognized an expansion of international feeling, due 
 directly, perhaps, to the development of steam-power and to 
 the discovery of the untold possibilities of electricity. Interna- 
 tional congresses began to be common. Besides the statis- 
 tical meetings to which reference has been made, the Postal 
 Congress in Paris, in 1863, first suggested by the United 
 States, is a notable example. There also, as the delegate of the 
 United States reported, the question of uniform coinage was 
 extensively discussed, " on the side." 
 
 But while affairs were thus slowly working to bring about 
 an international monetary conference, the French Emperor 
 saw an opportunity to act with more dispatch and with greater 
 glory to the French name. Louis Napoleon was in the zenith 
 of his imperial power. The world has quite fully appreciated 
 his weak points, not so his strong ones. Cold, calculating, 
 silent as the grave, as ambitious and, upon occasion, as un- 
 scrupulous as any monarch who ever lived, he did not hesitate 
 to play for the highest stakes. His timidity in the face of un- 
 favorable conditions was no more remarkable than his desper- 
 ate audacity when they seemed to favor him, and his faculty 
 for quickly perceiving an opportune moment, generally with 
 accuracy, was inherited from his celebrated uncle, and trained 
 by constant use in early life, the dream of which w r as the throne 
 of France. Before 1848, often in mean obscurity, though a 
 Napoleon, he was regarded by the French leaders with con- 
 tempt. When he suddenly appeared at Paris at the time of 
 the overthrow of Louis Philippe, the delegates considered him 
 too innocuous to require them to take the trouble to impose
 
 24 THE LATIN UNION 
 
 banishment; yet within two months he was elected to the Na- 
 tional Assembly from four different departments, and before 
 the close of the year was chosen President by an overwhelming 
 majority over the greatest statesmen of the time in France. 
 The so-called coup d'etat of 1851 required uncommon au- 
 dacity, but it was characteristic. He saw his chance, seized 
 it, and succeeded. Step by step, each time by the overwhelm- 
 ing sanction of the French people, he kept his course, and in 
 1862 he was the first monarch of Europe. " He had overawed 
 England, defeated Russia, and treated Italy as a magnanimous 
 patron." Under his command the French arms had again ac- 
 quired something like the old Napoleonic glory, in Eastern 
 wars, and at Magenta and Solferino, completely breaking Aus- 
 tria's power over the South German states. Neither a fool nor 
 a man entirely a knave could have accomplished so much, even 
 with the French spirit, for his ambition was not confined to the 
 possible glories of war. He had made Paris the first city in the 
 world, tearing down the old rookeries in which revolutions had 
 been hatched, and running over their sites magnificent boule- 
 vards. He did much to build up the commerce of the coun- 
 try, to develop its railroad system and its mining and manu- 
 facturing interests. The French people, freed from anarchy 
 for several years, and directed into industrial channels, be- 
 came as a nation more practical than ever before and more 
 prosperous. Largely by the Emperor's energy, the Suez 
 Canal had become a reality, and more than any other monarch 
 of those days he dabbled in political economy in search of ways 
 to extend the French name and influence. While dreaming 
 of a new imperialism in Mexico, he was also watching the new 
 economic movement among the nations watching for op- 
 portunities. 
 
 In 1863 he saw one. He had studied the development of 
 the sentiment for an international conference on the subject 
 of weights, measures, and coinage, and upon every opportu-
 
 NAPOLEON PERCEIVES AN OPPORTUNITY 25 
 
 nity had cultivated a scientific opinion in favor of French 
 methods. It was not like Napoleon to wait until some other 
 nation gained the fame, and, perhaps, the advantage of taking 
 the initiative. He was quick to see that, if the United States 
 adopted for their half-eagle the weight and fineness of the 
 English sovereign, as Secretary Chase was proposing, it would 
 not only be of great advantage to England, but would compel 
 France to change her whole coinage system without getting 
 any glory from it. His agents were active at the Postal Con- 
 gress and at the Statistical Congress in 18G3, and four months 
 later he sent out letters inviting all the sovereigns of Europe, 
 or their deputies, to another congress, ostensibly for the pur- 
 pose of settling various questions which appeared to threaten 
 the peace of Europe. The Continental states assented, but 
 England, whose plenipotentiaries had not long before quit 
 Mexico upon observing the Emperor's real purpose there, de- 
 clined the invitation on the ground, as stated by Lord Russell, 
 that such measures of prospective legislation were more likely 
 to embroil the several powers than to establish peace. The 
 project was, therefore, abandoned, and has always remained 
 something of a mystery from a political point of view. 
 
 The career of Louis Napoleon offers little ground for the 
 belief that he cared so much for peace if he saw that war might 
 afford him greater opportunities. But just at that time he 
 was interested in preserving a season of peace with France at 
 its centre. He had in mind for the near future a great Inter- 
 national Exposition, to be held at the newly beautified Paris, 
 something that would impress the world with the glories of 
 the second Napoleonic regime, and at the same time afford op- 
 portunities for international gatherings for the consideration 
 of such subjects as the unity of coinage. The idea had been 
 quietly fostered at the Postal Congress, and for some time the 
 various governments were prepared for the decree which went 
 forth early in 1865 for the exposition of 1867.
 
 26 THE LATIN UNION 
 
 One of the first steps for its promotion was the formation 
 of the Imperial Commission, with Prince Jerome Napoleon as 
 its head. It was a body not only French, but Napoleonic. It 
 set to work to prepare for the organization of the different de- 
 partments of the fair, and one of its first steps was the organiza- 
 tion of a scientific commission, an act approved by the Em- 
 peror in July, 1865, the objects of which were, according to 
 the act, first, to indicate the best means of representing at the 
 fair the recent advances of science, and, second, to contribute 
 to the extension of the employment of useful discoveries and 
 "to encourage reforms of international interest, such as the 
 adoption of uniform weights and measures, identical scientific 
 unities," etc. It was composed of Frenchmen appointed di- 
 rectly by the Imperial Commission, and later foreign mem- 
 bers were added by appointment of different governments, ap- 
 proved by the Imperial Commission. 
 
 While this commission was at work, and to some extent as 
 a result of its work, the Latin Union was formed. It may be 
 too much to assume that Napoleon was so deep a schemer as 
 to have planned this union for the effect it would have upon an 
 international monetary conference which he had determined 
 to assemble, if he could, at Paris, during the exposition. So 
 far as external appearances go they were very unsafe guides 
 to Napoleon's diplomacy the Latin Union seemed the nat- 
 ural result of circumstances which France was compelled to 
 recognize, and of which she took wise advantage, but it will 
 pay to study it in the light of associated events. This con- 
 ference at Paris in the fall of 1865 was the first important 
 monetary meeting on international lines, the only one that 
 ever resulted in a treaty, and, whether intentionally or not, it, 
 in a great degree, moulded the character of the general mon- 
 etary conference at the same place two years later, from the 
 economic effects of which grew the Silver Question. 
 
 To clearly apprehend the professed reasons for the forma-
 
 SILVER DRIVEN OUT OP FRANCE 27 
 
 tion of the Latin Union, it will be well to refer again to the 
 relative condition and value of gold and silver, especially as 
 they affected France. The value of bar silver at the average 
 quotations in London per ounce, British standard, the approxi- 
 mate intrinsic vahie in francs and its fractions of the 5-franc 
 piece, and the average ratio of silver to gold were, for the ten 
 years previous to the conference of 1865, as follows: 
 
 Year. 
 
 Pence. 
 
 Francs. 
 
 Ratio. 
 
 Year. 
 
 Pence. 
 
 Francs. 
 
 Ratio 
 
 ia55 
 
 61.313 
 
 5.04 
 
 15.38 
 
 1860 
 
 61.688 
 
 5.07 
 
 15.29 
 
 1856 
 
 61.313 
 
 5.04 
 
 15.38 
 
 1861 
 
 60.813 
 
 5 
 
 15.50 
 
 1857 
 
 61.750 
 
 5.07 
 
 15.27 
 
 1862 
 
 61.438 
 
 5.04 
 
 15.35 
 
 1858 
 
 61.313 
 
 5.04 
 
 15.38 
 
 1863 
 
 61.375 
 
 5.04 
 
 15.37 
 
 1859 
 
 62.063 
 
 5.10 
 
 15.19 
 
 1864 
 
 61.375 
 
 5.04 
 
 15.37 
 
 Since 1813 the commercial ratio of silver to gold had 
 averaged less than 16 to 1, and only once since 1851, in 1861, 
 had it averaged as high as 15.50 to 1. The effect on French 
 silver coins may be imagined. The 5-franc pieces disap- 
 peared. Whereas all large payments were formerly made in 
 sacks of 5-franc pieces, soon after the gold discoveries they 
 were made in gold, and the old 5-franc pieces were either ex- 
 ported or melted down and replaced by gold coins. That 
 metal being depreciated as to silver, there was a sure profit to 
 speculation. But while the diffusion of small gold pieces pre- 
 vented serious inconvenience at first, a new difficulty was en- 
 countered when, the 5-franc pieces having disappeared, the 
 fractional coins, 2 francs and less, began to vanish under the 
 speculator's wand. This difficulty appeared later in France 
 than elsewhere, and it was not till 1864 that she followed the 
 example of other countries in reducing the fineness of smaller 
 silver coins. But, unfortunately, the steps taken by different 
 governments had shown no uniformity. Although Italian 
 coins had the fineness of .835 that adopted by France 
 Switzerland had chosen that of .800. France soon saw rea- 
 son to fear that the Swiss coins, introducing themselves into 
 circulation by way of the eastern frontier, would usurp the
 
 28 THE LATIN UNION 
 
 place belonging to the national coin. In fact, the government 
 reported that Swiss coins had already penetrated into some 
 French provinces, giving rise to disputes and doubt in transac- 
 tions between private persons. In April, 1864, therefore, the 
 government prohibited the admission of Swiss coins in public 
 offices of receipts. 
 
 Meanwhile, Belgium had instituted an examination into 
 the question of the diminished fineness of its silver change, 
 and, in correspondence with the French government on the 
 subject, the utility of a treaty between the four nations whose 
 monetary systems rest on numeration by francs was suggested. 
 Napoleon at once dispatched invitations to the governments of 
 Belgium, Switzerland, and Italy, to send delegates to meet its 
 ow r n representatives at Paris. 
 
 While the situation was such as might suggest this action, 
 it is difficult to believe that it was so serious as to have led to 
 it at that time had there not been other motives at work. The 
 sole cause of disturbance was a difference of 35 thousandths in 
 the fineness of Swiss fractional coins, with those of France and 
 Italy. That France should w r orry over the introduction of a 
 few Swiss coins into her territory, displacing national coins, 
 and then form a treaty making all coins of three states legal 
 throughout her territory, is not easily understood. Her en- 
 trance into such an important alliance in the midst of prepara- 
 tions for an unparalleled exposition shows a haste which the 
 emergency did not seem to warrant. The conference opened 
 on November 20, 1865, under the presidency of Parieu, Vice- 
 President of the French Council of State, an extensive writer 
 upon coinage questions and the manager of the French pro- 
 gramme. The other French delegates were Pelouze, Minis- 
 ter of Finance, Ilerbet, representing the Ministry of Foreign 
 Affairs, and Julien, representing the Ministry of Agriculture, 
 Commerce, and Public "Works. Belgium's delegates were 
 Frederic Fortamps and M. A. Kreglinger; Italy's, Isaac Ar-
 
 QUADRIPARTITE AGREEMENT OF 1863 29 
 
 torn and Valentin Pratolongo; Switzerland's, Dr. Kern, Min- 
 ister to France, and Charles Feer-Herzog, member of the Swiss 
 National Council. 
 
 As a result of the deliberations of these delegates, con- 
 vened to remedy the slight diversity in Swiss and French frac- 
 tional coins, an agreement was made to unite in the regula- 
 tion of the weight, title, form, and circulation of their entire 
 coinage, of gold and silver, for fifteen years. The preamble 
 of the articles of agreement stated that the four powers, " ani- 
 mated by the desire to effect a more perfect harmony in their 
 monetary legislation, arid to remedy the inconvenience to trade 
 between their respective countries resulting from the diversity 
 of their small silver coin, and to contribute to the uniformity 
 of weights, measures, and coins, by forming a monetary 
 union," therefore resolved to conclude a convention for the 
 purpose. The articles show that the desire to contribute to 
 uniformity of coinage on the basis of the franc was the greatly 
 predominating consideration. They bound themselves not to 
 coin or permit to be coined any gold other than pieces of 100, 
 50, 20, 10, and 5 francs in weight, standard, tolerance, and 
 diameter, set forth in detail and practically from the French 
 mint regulations. They were to receive any of these coins 
 within their territory unless worn to ^ per cent, or their de- 
 vices effaced. They could coin silver 5-franc pieces, of the 
 qualities specified, to be received in the different countries 
 under the same conditions laid down for the gold coins. The 
 smaller silver pieces thereafter were to be only those of 2 francs 
 and 1 franc, and 50 and 20 centimes, of a fineness of .835, 
 and of other qualities specified. Pieces of a different coin- 
 age were to be withdrawn from circulation by January 1, 
 1869, with a year's further extension for certain coins. Pro- 
 vision was made for the limited legal tender of the small silver 
 coins between individuals, and for the public banks, and for 
 their redemption by the respective governments, which should
 
 30 THE LATIN UNION 
 
 not issue them to an amount greater than six francs for each 
 inhabitant, with certain exceptions. One section, and an im- 
 portant one, provided that any other nation could join the con- 
 vention by accepting the obligations and adopting the mone- 
 tary system of the union, and fifteen years was fixed for the 
 duration of the treaty, whereupon it might be extended. 
 
 The French programme was carried out to the letter, even 
 to the retention for the time of the double standard, in spite 
 of the fact that the delegates of the Belgian, Italian, and Swiss 
 governments unanimously and earnestly expressed the desire 
 that the principle of the gold standard should exclusively pre- 
 vail in the formation of the union. Because France opposed 
 the change at the time, it has been assumed to be another in- 
 stance of her heroic devotion to and defence of the double 
 standard. As a matter of fact, France did not defend the prin- 
 ciple of the double standard at all on this occasion. Her dele- 
 gates replied to those of the other states, who could have out- 
 voted France, that " common-sense undoubtedly decided for 
 the gold standard " ; that it was logical, but the question was 
 " premature." Undoubtedly it was premature in .Napoleon's 
 programme. He preferred to let matters wait till he had as- 
 sembled all the nations in a monetary conference, and then, 
 in the face of a probable demand for the gold standard, seem 
 to yield the double standard in consideration of the adoption 
 of the French coinage as a basis for monetary unity. One pre- 
 requisite of success in negotiations is to have something to 
 yield, a point which, as will be seen, the United States have 
 neglected in later monetary conferences. The French dele- 
 gates were at heart partisans of the gold standard. Parieu 
 was one of the strongest gold monometallists that France ever 
 had, and, as has been said, was the diplomatic manager of Na- 
 poleon's programme. 
 
 The seeds of silver demonetization had already been 
 planted. The difficult experiences in keeping silver in circu-
 
 GOLD STANDARD SOUGHT IN INDIA 81 
 
 lation had a good deal to do with it, but the filling of the cof- 
 fers of the great banks of Europe with the virgin gold of Cali- 
 fornia and Australia had more. The increase in commercial 
 activity was commonly attributed to the pouring in of the 
 yellow metal. 1 The reason why the bimetallic states had not 
 already formally adopted the gold standard by law was that 
 they had it in practice. It was really in silver states like 
 those of Germany states, the reader will notice, having a 
 standard of the appreciated metal that the agitation for the 
 gold basis seemed most pronounced. The question was even 
 mooted in India, the " sink of silver." Many Anglo-Indian 
 authorities at this time, fearing that silver might become still 
 more costly in relation to gold, and that the Indian currency 
 would become stinted, thereby causing a fall in prices and 
 serious inconvenience, deemed it desirable to seize the oppor- 
 tunity to adopt the gold standard, while retaining silver as 
 much as possible in circulation, and extending the issue of 
 notes. On account of the earnest discussion, the Indian gov- 
 ernment directed specific inquiries to be made. Sir William 
 Mansfield (late Lord Standhurst), then a member of the su- 
 preme executive council of India, argued for gold with so much 
 skill that many thought the time had come to make the 
 change. But the financial secretary, and a majority of the 
 functionaries, who, paid for their services in silver, gained 
 something on their remittances to England, were loath to dis- 
 
 i " We find here [in Great Britain] our external trade doubled in 
 the last twelve years, and this external trade is, we believe, but a 
 faint representation of the increase of transactions throughout the 
 whole of our domestic industry. But not only has this multiplying 
 process been carried on in these islands; it has prevailed almost as 
 largely in France, and has spread all over Germany. It has filled 
 Italy, aroused Spain from its long lethargy, and penetrated even the 
 remote provinces of Russia. No corner of Europe has remained 
 insensible to the new stir of industry and enterprise. All these facts 
 are indications of the enormous addition which has been made dur- 
 ing the last fifteen' years to the. extent and depth of the channels of 
 circulation required to be filled with metallic money in some form or 
 other." London Economist, May 11, 18G5.
 
 32 THE LATIN UNION 
 
 turb the long-accepted standard. A compromise was suggested 
 by which gold should be attracted into circulation as a legal 
 tender, while retaining silver as the standard, and an attempt 
 in this direction was made by declaring the English sovereign 
 legal tender for ten rupees, an act which went into force in 
 December, 1864, but was revoked four or five years after- 
 wards on its being found that the coins fetched more in rupees. 
 It is essential to observe closely the course of silver at this 
 particular time. The treaty of the Latin Union was duly 
 ratified by the several states, and went into effect August 1, 
 1866. A marked change appeared in the French silver coin- 
 age the next year. From 1860 up to the beginning of 1867, 
 the average number of 5-franc pieces coined at the French 
 mints was about 40,000. For the next four years the number 
 
 was : 
 
 1867, 10,810,312 
 
 18G8, . . . . . 18,724,110 
 
 1869, 11,652,857 
 
 1870, 10,729,670 
 
 In other words, the average became 300 times greater. But 
 this increase was not because of the treaty, though it is a curi- 
 ous fact that the price of silver, which was 62^ pence in June, 
 was only 60|- in August when the treaty went into effect. It 
 was at this time that silver, after being, with hardly an in- 
 terruption, at a premium as to gold, dropped below the French 
 parity. Since April, 1867, it has never for a moment reached 
 it. The average intrinsic value of the 5-franc piece in 1866 
 was 5.022, in 1867 it was 4.981. Yet the demand for silver 
 for coinage in Europe has seldom been more active than it 
 was then. Not a single nation had demonetized the metal. 
 Only two nations in all Europe had the gold standard by law, 
 England and Portugal, and the latter made little difference. 
 Southern Germany had no gold coinage at all. The marked 
 increase in the production of silver had not begun. 
 
 What and where was the cause of this beginning of the
 
 BEGINNING OF SILVER'S GREAT FALL 33 
 
 decline? One might think that, the coinage of legal-tender 
 silver in France jumping from 185,000 francs in 1866 to 
 54,000,000 in 1867, the price would have stiffened; but it is 
 also observed that the export of silver from the empire fell 
 from 195,000,000 francs in 1866 to 60,000,000 in 1867. For 
 twelve years before 1865 French exports of silver had exceed- 
 ed imports, even as much in one year as 350,000,000 francs. 
 In 1865, the opposite tendency began, imports exceeding ex- 
 ports 70,000,000 francs; in 1866, 40,000,000, and in 1867 
 by 180,000,000. The trouble, apparently, was a falling off 
 in the export demand for silver, altogether out of proportion 
 to the demands for its coinage and circulation at home. Turn- 
 ing to India, the great absorber of the metal, we find that her 
 importations of silver amounted to 475,000,000 francs in 
 1866, 1 and to only 204,000,000 francs in 1867, 1 or considera- 
 bly less than one-half. No increase appeared in the council 
 bills sold ; it was simply a decrease of about one-half in the total 
 remittances to India. There was not simply a decrease in the 
 Indian exportations of merchandise, but a sudden falling off in 
 the investment of English capital in the colony, particularly 
 for railroads. We shall have occasion to treat of these facts 
 more fully in the history of the next decade. They are sug- 
 gested here to indicate the nature of the change that took place 
 at about the time the Latin Union treaty went into effect, 
 changes which cannot be attributed to the treaty, but which 
 produced remarkable effects on the silver coinage. It so hap- 
 pened that the union was formed at the very beginning of sil- 
 ver's great decline, the initial cause of which must be laid at 
 the doors of British India, which, late in 1864, took a step 
 towards the gold basis. This cause alone, however, would not 
 have produced a permanent depreciation. It was followed by 
 a most remarkable combination of circumstances. 
 
 Fiscal year ending March 31.
 
 CHAPTER II 
 
 GENERAL ACCEPTANCE OF THE PRINCIPLE OF THE GOLD STANDARD - 
 CONFERENCE OF 1867 
 
 EVENTS were shaping themselves very nicely for Napoleon's 
 purposes. The " silent " man was not a dull man. He was 
 well aware that a monetary union, composed of France, Italy, 
 Belgium, and Switzerland, would be a much more important 
 factor in the general conference he proposed making a feature 
 of the exposition than France would be alone. In speaking 
 of uniform coinage at the time, a representative of the French 
 government said : " This convention between the four powers 
 is a first step that will have its influence. It proposes and in- 
 vites future conventions. If the question comes up hereafter 
 before higher powers, as we hopa it will, France will bring 
 a great influence with her forty millions, or, if expected an- 
 nexations are realized, her one hundred millions of people 
 using her monetary system." The inference is plain. Na- 
 poleon closely watched developments everywhere, and his 
 political agents gave generous encouragement to any move- 
 ment favorable to his designs. He kept his hands off while the 
 Prussians overthrew the Austrians in the Schleswig-Holstein 
 war in 1866, it is generally said, because he was checked by 
 political antagonism in the Chamber, some champions of the 
 old republicanism having been successful in elections; but it 
 is more probable that he remained passive from choice, and 
 because of the pacific economic policy dear to him for the mo- 
 ment. The success of his great exposition and of his monetary 
 programme depended largely upon his neutrality and the 
 peaceful condition of Europe. When, in 1866, Secretary Sew-
 
 INTERNATIONAL COINAGE URGED IN CONGRESS 85 
 
 ard insisted on the recall of the French troops from Mexico, 
 Xapoleon did not show the resistance and delay that- the oppor- 
 tunities afforded him, or that might have been expected from 
 his character. The tearful appeals of Carlota were in vain. 
 The fate of an Austrian prince was sealed in his economic 
 campaign. 
 
 The French government was active in the latter part of 
 1866 in efforts to secure annexations to the Latin Union. Dif- 
 ficulties appeared in the way of this, but as to the general sub- 
 ject of uniform coinage the other nations stood in a responsive 
 position. It was extensively discussed in England, and money 
 reform was one of the conspicuous features of that movement 
 in which all the German states were drawing closer and closer 
 to Prussia. German economic opinion was already for gold. 
 
 The Treasury officials and finance committees of the United 
 States, however, said very little about gold or silver, for the 
 principle of the gold standard was accepted without question, 
 but they emphasized the old provocation for international 
 action the decimal system. John A. Kasson, who had rep- 
 resented this country at the Postal Congress of 1863, where 
 Xapoleon's agents were active, submitted to the Thirty-ninth 
 Congress, in May, 1866, a report of the coinage committee, 
 devoting much space to the discussion of the possibilities of the 
 general acceptance of the decimal system. He suggested that 
 the occasion of the Paris Exposition the following year would 
 " furnish the proper opportunity for a free conference between 
 the authorized commissioners of the different governments as 
 to the best means of establishing a uniform system of coinage 
 for the common use of the nations of the world. The only in- 
 terest of any nation," the report went on to say, " that could 
 possibly be injuriously affected by the establishment of this 
 uniformity is that of the money-changers an interest which 
 contributes little to the public welfare while by diversity of 
 coinage and of values it adds largely to private accumula-
 
 36 THE CONFERENCE OF 18C7 
 
 tions." One paragraph in the document indicates how little 
 question there was in the United States as to which metal 
 should constitute the standard of value. It reads : " The only 
 indispensable condition of this uniformity of value is, that in 
 the standard unit, with its divisions and multiples used in com- 
 merce, there shall be in all countries an equal amount of gold 
 (or silver) with fixed proportion of alloy. Each nation will 
 retain its own devices and legends, and other peculiarities of 
 mintage. A common name for the standard unit would be 
 desirable, but not essential. The presence of a given amount 
 of precious metal, mixed with a given amount of alloy, is the 
 only absolute prerequisite for the establishment of interna- 
 tional uniformity of coinage." 
 
 The parenthetical appearance of silver after gold is sug- 
 gestive. It wears the livery of an afterthought, as if the first 
 draft of the report had not contained it, but, upon re-reading 
 and reflection, it had occurred to the writer or to some one on 
 the committee that silver ought at least to be mentioned out of 
 courtesy, if not as a possibility. Naturally, it would be, in view 
 of the fact that it was at that time either the sole 
 standard of value, or, in theory, a collateral standard with 
 gold in every nation of importance in the world, except the 
 English. But in practice, silver had, as the dearer metal, be- 
 come so subsidiary that the theory was almost lost sight of in 
 the fact. This was especially true in the United States, which 
 were proceeding on a paper basis. Everybody, in speaking of 
 specie, meant gold, without considering it a matter demanding 
 any qualification, and without being in danger of injuring any 
 one's feelings. Only those who had made a study of financial 
 questions, and such persons were rare in this country then, 
 thought of the double standard as existing even theoretically. 
 Few in that generation had ever seen a United States silver 
 piece of full legal tender. They were as rare as coins of the 
 fifteenth century.
 
 IMPERIAL COMMISSION AT WORK 87 
 
 This government could not have been in a more favor- 
 able position to enter into an agreement as to coinage, 
 for it could yield with little inconvenience to a variation 
 of its dollar if necessary, its coin being withdrawn from cir- 
 culation. Moreover, it seemed probable then that the con- 
 sent of the United States, England, and France would ulti- 
 mately result in the consent of all commercial nations. Not 
 being aware, apparently, of what was going on in the mind of 
 Louis Napoleon, the House of Representatives, acting on Kas- 
 son's report, early in 1866 passed a resolution authorizing the 
 President " to appoint a special commissioner to facilitate the 
 adoption of a uniform coinage between the United States 
 and foreign countries " ; but it was delayed in the Senate and 
 finally abandoned, Napoleon's diplomatic steps having come 
 to light. The State Department had for some time been in- 
 formed of the general purposes of the French Emperor, though 
 his motives seem to have escaped detection. 
 
 After the treaty of the Latin Union went into effect, the 
 Imperial Commission devoted its attention with much assi- 
 duity to this branch of its duties. Several meetings were held 
 and attended by the members of the Scientific Commission 
 and such of the foreign commissioners to the exposition as were 
 already at Paris. The first session, officially entitled a " Pre- 
 paratory Conference Relative to the Establishment of an Inter- 
 national System of Measures, "Weights, and Coins," was held 
 May 2, 1866, and was presided over by Le Play, the French 
 Commissioner-General. The tTnited States were represented 
 by N. M. Beckwith, an eminent American merchant who had 
 been appointed Commissioner-General for this country. The 
 result was that at a later meeting, and at the suggestion of 
 Prof. Leone Levi, of London, it was decided to have an exhi- 
 bition of coins of various nations, to appoint an international 
 committee to supervise it and to take whatever steps it 
 deemed best for drawing public attention to the subject of
 
 38 THE CONFERENCE OF 1867 
 
 uniformity in coins. Commissioner Beckwith kept Secretary 
 Seward fully informed of all these steps. Early in July lie 
 sent to the State Department a copy of the treaty of the Latin 
 Union, which had just been ratified by France, and hinted that 
 the United States could easily adapt its coinage system to that 
 of the new union without substituting the French unit for 
 their own. " Our gold dollar/' he said, " is equal to 517 cen- 
 times. A reduction of 17 centimes (3^ cents) would leave it an 
 exact multiple of the French unit, or franc, and the equivalent 
 of five francs." 
 
 In October, Secretary Seward notified Beckwith of the ap- 
 pointment of Samuel B. Ruggles, of J^ew York, as one of the 
 scientific commissioners for this country, and for the special 
 purpose of acting in relation to uniform coins. Congress, by a 
 law passed the previous July, had made the metric system legal 
 and optional in the United States. 
 
 Napoleon waited while these operations were going on, till 
 Prussia had finished measuring arms with Austria, and till 
 the close of the sharp correspondence with this country over 
 Mexico, before setting his diplomatic machinery actively in 
 motion in behalf of the Latin Union. When peace was finally 
 restored in Europe, and the imperial dream of Latin political 
 influence on the western continent was over, he brought the 
 subject plainly to the attention of the various governments. It 
 was on January 4, 1867, that Berthemy, the French minister to 
 this country, officially transmitted to Secretary Seward a copy 
 of the treaty of the Latin Union, with an explanation of its 
 provisions, and a polite invitation to the United States to ac- 
 cede to it; or, if not desiring to do that, to either enter into 
 arrangements destined to establish equations between some of 
 the monetary types of gold and silver, or to take part in an in- 
 ternational conference at which might be discussed the means 
 of arriving at a more extended monetary understanding. The 
 treaty of the union, he assured Seward, " had a sole object, that
 
 FRANCE SEEKS ADDITIONS TO THE UNION 39 
 
 of putting an end to the abnormal disappearance of fractional 
 silver money," which was doubtless " diplomatically " true, 
 though, in the extensive plans of Napoleon, the treaty in- 
 cluded a good deal more and served other and far-reaching 
 purposes. 
 
 Commenting on the conveniences the four states of the 
 union enjoyed in conducting their gold and silver coinage 
 under identical conditions, Berthemy added : " After having 
 brought about the disappearance of divergencies of which they 
 recognized the inconveniences, the delegates of France, of Bel- 
 gium, of Italy, and of Switzerland, seeing a population of 
 seventy million souls thenceforth endowed with the same 
 monetary system, must quite naturally have been led to fix 
 attention on an interest more general, . . . the establish- 
 ment of a general monetary circulation among all civilized 
 states. The government of the Emperor would be very happy 
 to see this proposition well received, but, at the same time, can- 
 not dissemble the difficulties and objections it may encounter. 
 But it doubts not, at least, that the views which are thus in- 
 spired correspond with necessities which henceforth must press 
 upon the solicitude of governments." 
 
 He expressed the hope that, if the United States found 
 objections too serious to permit them to adhere to the quadri- 
 partite agreement of 1865, the French government might be in- 
 formed of their nature, so that the Latin Union might under- 
 stand the situation, and, if possible, devise means of removing 
 them. The question of the standard of value is not mentioned 
 in the minister's note, nor the decimal system, except indirectly 
 as a feature of the French system. Secretary Seward replied, 
 February 13, that, having consulted the Secretary of the Treas- 
 ury (Hugh McCulloch) upon the subject, he had the honor to 
 state that the United States government, both in its execu- 
 tive and legislative departments, had repeatedly manifested its 
 interest in the question of international unification of mone-
 
 40 THE CONFERENCE OF 1867 
 
 tary standards; that the importance of a standard unit of 
 equal value in all commercial countries for the uses of account 
 and currency was fully recognized and appreciated, and that 
 the ideal object presented by France being acceptable, it only 
 remained to be decided how the desired result might be brought 
 about. He hoped that neither the quadripartite convention of 
 1865 nor the proceedings already adopted under its provisions 
 would be held to preclude any of those governments from en- 
 tering into considerations in favor of its modification, which 
 might be offered by other governments in the interests of a 
 system universally acceptable. 
 
 In thus intimating that the French government should 
 not hold too tenaciously to its own system, possibly Seward 
 suspected the nature of the ambition of the Emperor, whose 
 efforts were meanwhile prospering. The States of the Church 
 had already acceded to the union in 1866, and Greece and 
 Roumania joined early in 1867, or at about the time of his 
 first overtures to this government. His proposition seemed to 
 be generally received with favor, the moment being oppor- 
 tune. But Prussia manifested some shyness. Bismarck, who 
 had elaborate plans for the unification of the German states 
 well in hand, as a result of the victory over Austria, was not 
 sure of what he wanted in monetary matters, and was perhaps 
 a little suspicious of JSTapoleon. In response to the latter's 
 diplomatic invitation to join the Latin Union, Bismarck, on 
 February 2, 1867, caused a note to be sent to the Prussian 
 minister at Paris, stating that the confederation of Northern 
 Germany was entering upon " a political programme which 
 may include its local monetary systems," and that the Chancel- 
 lor might choose to await the completion of the programme 
 before entering upon the subject of international unification. 
 Xapoleon was to play a much more important part in that pro- 
 gramme than he could have imagined then. Sedan was to 
 figure in its " completion."
 
 RUGGLES CONFERS WITH PARIEU 41 
 
 On arriving at Paris in March, Commissioner Ruggles 1 
 was appointed by the Imperial Commission to the interna- 
 tional committee, already referred to, but before it had taken 
 up the discussion of unifonn coinage Michel Chevalier, a 
 member of it, introduced him to Parieu, who was in charge of 
 Napoleon's monetary programme, and with whom he discussed 
 the possibility of the adhesion of the United States to the 
 Latin Union. Ruggles maintained the same position that he 
 held at Berlin four years before, and said that the United States 
 might be able to adhere if the union would coin a 25-franc 
 piece. Parieu could not see the necessity of it if the dollar 
 were made equivalent to 5 francs; for the gold eagle would 
 then have an equivalent in the 50-franc piece. The greatest 
 objection that the French government seemed to have to the 
 25-franc piece was that it might compete with and, to some 
 extent, drive out of circulation the " Napoleon," or 20-franc 
 piece. However, Parieu said that if it seemed to the United 
 States essential that such a coin should be made, the Latin 
 L T nion treaty might be modified, probably. The aim of the 
 French government at this time, no more* accessions to the 
 union appearing immediately possible, was to test the opinion 
 
 i Some usually fair bimetallic writers have endeavored to re- 
 flect on the ability of Ruggles, and belittle his official position. The 
 late Francis A. Walker says in his "International Bimetallism": "Mr. 
 Ruggles did not even go to Paris for that purpose. He was already 
 there as the United States Commissioner to the Exposition; and, to 
 save the expense of sending a delegate to the conference, was em- 
 powered to act in that capacity." This is incorrect, as the letters of 
 Secretary Seward to Ruggles plainly show. In his letter to Com- 
 missioner Beckwith in October. 186(i, informing him of the appoint- 
 ment of Ruggles, Seward said: "Mr. Ruggles represented the 
 United States at the late Statistical Congress at Berlin, and has 
 already been in correspondence with the international committee or- 
 ganized upon that occasion upon this important subject (interna- 
 tional coinage), to which he has devoted much study." Later, in 
 notifying the French government of the appointment of Ruggles to 
 the conference, Seward said that he was " familiar with the views 
 of this government." Ruggles's prejudice for gold was no stronger 
 than the government's, or than that of any one in the country at that 
 time.
 
 42 THE CONFERENCE OP 1867 
 
 in the various countries through the medium of members of the 
 international committee, and of the commissioners to the fair, 
 as to making coinage equations with the union in order to pre- 
 pare as definite a programme as possible for the conference. 
 
 As a result of his conversation with Parieu, on the 17th of 
 May Ruggles wrote a note to Senator Sherman, who was at 
 Paris visiting the fair, inquiring whether Congress would 
 probably consent to make the gold dollar conform in value to 
 the gold five-franc piece. On account of the nature of the 
 senator's reply and of the circumstances, some injudicious sil- 
 ver advocates in this country have endeavored to cast suspicion 
 upon him, and to connect in some way his presence in Paris 
 with a conspiracy to force the gold standard on the nations of 
 Europe. Those who have made this charge, and were in public 
 life at that time, were in entire accord with Sherman in so 
 far as they held any opinion at all on the subject. Sherman's 
 reply so well represents the position of the administration and 
 of the leaders at Washington at that time that it is here given 
 
 in full: 
 
 " HOTEL JARDIN DES TUILERIES. 
 
 " May 18, 1867. 
 
 " My dear Sir: Your note of yesterday, inquiring whether Con- 
 gress would probably, in future coinage, make our gold coins con- 
 form in value to the gold 5-franc piece, has been received. 
 
 " There has been so little discussion in Congress upon the subject 
 that I cannot base my opinion upon anything said or done there. The 
 subject has. however, excited the attention of several important 
 commercial bodies in the United States, and the time is now so fa- 
 vorable that I feel quite sure that Congress will adopt any practical 
 measure that will secure to the commercial world a uniform standard 
 of value and exchange. The only question will be how this can be 
 accomplished. 
 
 " The treaty of December 23, 1805, between France, Italy, Bel- 
 gium, and Switzerland, and the probable acquiescence in that treaty 
 by Prussia, has laid the foundation for such a standard. If Great. 
 Britain will reduce the value of her sovereign twopence, and the 
 United States will reduce the value of her dollar something over three 
 cents, we then have a coinage in the franc, dollar, and sovereign 
 easily computed, and which will readily pass in all countries: the dol- 
 lar as five francs, and the sovereign as 25 francs. This will put an 
 end to the loss and intricacies of exchange and discount. 
 
 " Our gold dollar is certainly as good a unit of value as the franc, 
 and so the English think of their pound sterling. These coins are
 
 SHERMAN'S LETTER TO RUGGLES 43 
 
 now exchangeable only at considerable loss, and this exchange is a 
 profit only to brokers and bankers. Surely, each commercial nation 
 should be willing to yield a little to secure a gold coin of equal value, 
 weight, and diameter from whatever mint it may have been issued. 
 As the gold 5-franc piece is now in use by over 00,000,000 of people 
 of several different nationalities, and is of convenient form and size, 
 it may well be adopted by other nations as the common standard 
 of value, leaving to each nation to regulate the divisions of this unit 
 in silver coins or tokens. If this is done France will surely abandon 
 the impossible effort of making two standards of value. Gold coins 
 will answer all the purposes of European commerce. A common 
 gold standard will regulate silver coinage, of which the United 
 States will furnish the greater part, especially for the Chinese trade. 
 
 " I have thought a good deal of how the object you propose may 
 be most readily accomplished. It is clear that the United States 
 cannot become a party to the treaty referred to. They could not 
 agree upon the silver standard, nor could we limit the amount of our 
 coinage as proposed by the treaty. The United States is so large 
 in extent, is so sparsely populated, and the price of labor is so much 
 higher than in Europe, that we require more currency per capita. 
 We now produce the larger part of the gold and silver of the world 
 and cannot limit our coinage except by the wants of our people and 
 the demands of commerce. 
 
 "Congress alone can change the value of our coin. I see no 
 object in negotiating with other powers on the subject. As coin is 
 not now in general circulation with us, we can readily fix by law 
 the size, weight, and measure of future issues. It is not worth 
 while to negotiate about that which we can do without negotiation, 
 and we do not wish to limit ourselves by treaty restrictions. 
 
 " In England many persons of influence and different Chambers 
 of Commerce are earnestly in favor of the proposed change in their 
 coinage. The change is so slight with them that an enlightened 
 self-interest will soon induce them to make it. especially if we make 
 the greater change in our coinage. We will have some difficulty 
 in adjusting existing contracts w r ith the new dollar; but as con- 
 tracts are now based upon the fluctuating value of paper money, 
 even the reduced dollar in coin will be of more purchasable value 
 than our currency. 
 
 " We can easily adjust the reduction with the public creditors in 
 the payment or conversion of their securities, while private creditors 
 might be authorized to recover upon the old standard. All these 
 are matters of detail, to which I hope the commission will direct 
 their attention. 
 
 "And now, my dear sir, allow me to say in conclusion that I heart- 
 ily sympathize with you and others in your efforts to secure the adop- 
 tion of the metrical system of weights and measures. The ten- 
 dency of the age is to break down all needless restrictions upon 
 social and commercial intercourse. Nations are now as much akin 
 to each other as provinces were of old. Prejudices disappear by 
 contact. People of different nations learn to respect each other 
 as they find that their differences are the effect of social and local 
 custom, not founded \ipon good reasons. 
 
 " I trust that the industrial commission will enable the world to 
 compute the value of all productions by the same standard, to meas-
 
 44 THE CONFERENCE OF 1867 
 
 ure by the same yard or meter and weigh by the same scales. 
 Such a result would be of greater value than the usual employments 
 of diplomatists and statesmen. 
 
 " I am very truly yours, 
 
 "JOHN SHERMAN." 
 
 The terms of this letter, which were communicated to Sec- 
 retary Seward, were entirely approved by him in a note to 
 Ruggles, as adequately and accurately representing the views 
 of 'the administration. Ruggles showed the letter to Parieu, 
 who introduced him to the Minister of Foreign Affairs, and 
 the latter quickly secured for him an interview with the Em- 
 peror at the Tuileries. Ruggles afterwards gave Secretary 
 Seward an account of this interview, from which it appears 
 that Napoleon secured all the information he could as to what 
 the United States might do and what Ruggles thought France 
 could do. He showed the Sherman letter to the Emperor, and 
 said it was as good a statement of the opinion of Congress as 
 could be secured. He also presented it to the international 
 committee, and it unquestionably had influence on the course 
 of events, but only a cumulative influence in developing a 
 plan which soon became the plan of the conference. In a 
 letter to Seward several weeks later Ruggles said : " It is but 
 due to the history of unification of money to state that the 
 earnest and active agitation of this subject in a practical form 
 on the part of the United States exerted its full share of in- 
 fluence in leading the government of France to adopt the de- 
 cisive measure of inviting in diplomatic form an authoritative 
 conference of delegates, duly accredited from all the nations 
 of the European and American world practically accessible, 
 to meet at Paris on the 17th of June, not merely for an ex- 
 change of views or a discussion of general principles, but 
 practically to seek for the basis of ulterior negotiations be- 
 tween the nations." 
 
 So general was the sentiment for uniform coinage, so 
 shrewdly had Xapoleon directed the favorable current of
 
 NAPOLEON'S INVITATION TO THE UNITED STATES 45 
 
 events, and so easily did various opinions conform to his pro- 
 gramme, that the enthusiastic representatives of other nations 
 overlooked his influence and his purposes, and actually thought 
 that they were themselves the mainspring of the movement. 
 The United States Commissioner may, under the circum- 
 stances, be pardoned for seeking to give to his government 
 more credit than it actually deserved for bringing about the 
 conference, the prospects of which seemed so bright. Baron de 
 Hock, of Austria, another enthusiastic advocate of uniform 
 coinage and member of the international committee, had a 
 similar opinion of the part Austria was playing. Even had 
 it been for a long time Napoleon's intention to call a conference 
 when he had secured all the additions possible to the Latin 
 Union, the United States and Austria deserve whatever credit 
 should be accorded them for being, for reasons of their own, 
 distinctly favorable to the Emperor's ambitious project, which, 
 had it been carried out, would unquestionably have been of 
 the greatest benefit to mankind, not so much in providing a 
 uniform coinage as in demonstrating quickly and clearly that 
 the simultaneous adoption of an exclusive gold standard by all 
 Christendom was at that time a practical impossibility. 
 
 Early in May France sent out through the diplomatic 
 channels the formal invitations to the conference. Minister 
 Berthemy assured Secretary Seward that the commissioners 
 would assemble " without any programme arranged in antici- 
 pation," a form of expression frequently used by those who 
 have been quietly making the most elaborate preparations. The 
 jester's definition of diplomacy as the art of skillful lying did 
 not lose its appropriateness with the lapse of the eighteenth 
 century. " The conference proposed," wrote Berthemy, " has 
 not otherwise any immediate object than to call out an inter- 
 change of views and discussion of principles; in a word, to 
 seek for the basis of ulterior negotiations." His government, 
 he said, desired to be informed of the names of the accredited
 
 46 THE CONFERENCE OF 1867 
 
 delegates as soon as possible, the time set for the conference 
 being not far off. It is obvious that the calling of a conference 
 to meet in four weeks would naturally have the tendency, if it 
 had not the object, of securing as delegates to it a large num- 
 ber of the representatives of the governments already at Paris 
 as members of the international committee, which, under the 
 guidance of the Imperial Commission, had the subject of uni- 
 form coinage, according to French ideas, well in hand. Sec- 
 retary Seward acknowledged the note on May 29, and informed 
 Berthemy that Ruggles, who was " familiar with the views of 
 this government," had been specially authorized to represent 
 it to the extent and in the spirit of the invitation. 
 
 The international committee meanwhile continued its work 
 and conveniently completed its labors on the very day that 
 the conference met by adopting the following propositions as 
 a means for securing international uniformity in coinage : 
 
 " 1. An identical unity in the issue of gold coins by different 
 nations. 
 
 " 2. The desirability of having such coins uniformly nine-tenths 
 fine. 
 
 " 3. The desirability of having for each government pieces of 
 equal value with pieces in other states. 
 
 " 4. Recommending the coins of the Latin Union as the basis 
 of a general monetary system. 
 
 " 5. Recommending the five-franc piece as a unit. 
 
 " 6. Uniform coins of each country to be legal tender in all the 
 other countries. 
 
 " 7. The desirability of abolishing the double standard where it 
 exists. 
 
 " 8. The desirability of using the decimal system everywhere. 
 
 " 9. The desirability of agreeing upon common measures of 
 control." 
 
 Such was the programme laid down by the international 
 committee for the formal conference, some of the leading mem- 
 bers of which were members of the international committee. 
 It becomes clear enough, when events are thus arranged in their 
 proper order, that the adoption of the principle of the gold 
 standard and the extensive demonetization of silver which 
 occurred a little later was not due to hidden conspiracies or
 
 THE CONFERENCE ASSEMBLES 47 
 
 surreptitious efforts of the moneyed classes, but was an eco- 
 nomic movement, open and above board, except in so far as .N a- 
 poleon was using it for his own ambition. Bimetallic France, 
 eulogized so much for its devotion to the double standard, was 
 mainly instrumental in hastening the consummation of the 
 movement, which was principally due to the abundance of gold 
 and the difficulty of keeping appreciated silver in concurrent 
 circulation. It was an agitation which conspicuously bore the 
 stamp of the approved school of political economy. 
 
 Kapolcon could not have been otherwise than grati- 
 fied at the response of the nations as indicated by the charac- 
 ter and standing of the delegates who assembled on the morn- 
 ing of the 17th at the hotel of the Department of Foreign Af- 
 fairs. There have been many congresses of a politico-diplo- 
 matic nature attended by the most eminent statesmen of the 
 times, but there has seldom been an international conference 
 made up of so many men of the highest standing in science and 
 economics. In point of recognized ability no monetary con- 
 ference has surpassed it. Great Britain sent Thomas Graham, 
 the celebrated chemist, who, since 1855, had been Director of 
 the Royal Mint, had published many valuable and standard 
 works on chemistry, and was a fellow of the Royal So- 
 ciety. From Bavaria came Friedrich Wilhelm von Hermann, 
 one of the most distinguished economists of his day. His great 
 work, " Staatswirthschaftliche Untersuchen " (" Economic 
 Researches "), appeared in 1832, and three years later he was 
 made a member of the Royal Bavarian Academy of Science. 
 From that time until his death, a few weeks after the confer- 
 ence, his life was a succession of active and energetic services in 
 economic lines. In 1839 he assumed charge of the Bavarian 
 Bureau of Statistics, which acquired a wide reputation; in 1848 
 he sat as member for Munich in the national assembly at 
 Frankfort, where he w r as instrumental in organizing the so- 
 called " Great German party," whose views he also represented
 
 48 THE CONFERENCE OF 1867 
 
 at Vienna. In the course of his busy life he published many 
 reviews and papers, and as the head of the Bureau of Statistics 
 published a yearly report of high value. The little state of 
 Switzerland was represented by three of its ablest and most 
 distinguished men, Dr. J. Conrad Kern, Dr. Alfred Escher. 
 and Charles Feer-Herzog. Dr. Kern, who was then Minister 
 to France, early in life became prominent in Swiss affairs, and 
 distinguished for his legal and administrative ability. When, 
 in 1838, the French government demanded the extradition of 
 Louis Napoleon, then living in exile in Switzerland, Dr. Kern 
 took the most prominent part at the Diet in stirring up the 
 Swiss to refuse to be intimidated, and war was averted only by 
 Napoleon voluntarily going to England. In 1848, Kern took 
 a leading part in the preparation of the federal constitution, 
 and on many notable occasions in Europe he was the repre- 
 sentative of his country. In the regeneration period of Swit- 
 zerland which marked the beginning of a new era in the his- 
 tory of the country, no statesman had taken a more conspicu- 
 ous part than Dr. Escher. In later life his energies were chiefly 
 devoted to educational plans, the reorganization of church pol- 
 icy, and the promotion of banking institutions and railway en- 
 terprises, the notable manner in which engineering difficulties 
 in the Swiss mountains have been met, as in the St. Gothard 
 line, with its fifty tunnels, being a monument to his energy. 
 In 1849 he became President of the National Council, and at 
 the time of the conference was Director of the Mint. Charles 
 Feer-Herzog, a member of the National Council, had been ac- 
 tive in the formation of the Latin Union, and was destined to 
 have an influential part in this and a subsequent conference. 
 He had studied and written much upon monetary subjects, and 
 was already considered a leading advocate of the gold standard. 
 From Russia came Moritz Jacobi, a celebrated scientist, a 
 Privy Councillor, and a member of the Imperial Academy of 
 Sciences at St. Petersburg. From Greece, Theodor Delyan-
 
 THE GOVERNMENTS AND THEIR REPRESENTATIVES 49 
 
 nis, a man of forty, just beginning his notable career as Minis- 
 ter to France. The accomplishments and earnest services of 
 Samuel B. Ruggles, the American delegate, have already been 
 referred to. He was a native of Connecticut, a graduate of 
 Yale, and for many years had been a leading member of the 
 New York bar, having made commercial matters an especial 
 study. 
 
 Austria was represented by Baron de Hock, Privy Coun- 
 cillor, and a member of the House of Lords; Baden, by Baron 
 Schweizer, Minister to France, and Dietz, Privy Councillor 
 and Commissioner-General to the Exposition ; Bavaria, in addi- 
 tion to Hermann, already mentioned, by Haindl, Director of 
 the Mint ; Belgium, by Senator Fortampe, Director of the Bank 
 of Belgium, and by Stas, Commissioner of Coinage and mem- 
 ber of the Royal Academy; Great Britain, in addition to 
 Thomas Graham, by Rivers Wilson of the Treasury Depart- 
 ment, and better known later as the Minister of Finance, 
 chosen by the Khedive of Egypt in 1879, when England was 
 seeking protection for the Suez bonds; Italy, by Isaac Artom, 
 Councillor of the Italian legation at Paris, and by F. Giordono. 
 Inspector of the Royal Corps of Mines and Commissioner to 
 the Exposition; Denmark, by Count Hvitfeldt, Minister to 
 France; the Netherlands, by A. Vrolik, formerly Minister of 
 Finance, and the author of a work on " The Demonetization of 
 Gold," which had attracted considerable attention, and by 
 President Mees of the Bank of the Netherlands; Portugal, by 
 Count d'Avila, Minister to Spain and Commissioner to the Ex- 
 position, and by Viscount de Villa Major; Prussia, by Mein- 
 ecke, Superior Privy Councillor of Finance, and Herzog, 
 Councillor of the Department of Commerce and Commissioner 
 to the Exposition; Sweden, by Wallenberg, member of the first 
 chamber of the Swedish Diet and a Director of the Bank of 
 Stockholm; Norway, by Dr. O. J. Broch, member of the 
 Storthing and President of the Commission to the Exposition;
 
 50 THE CONFERENCE OF 1867 
 
 Spain, by Count Nava de Tajo of the Department of Foreign 
 Affairs; Turkey, by Djemil Pacha, Ambassador to France; 
 Wiirtemberg, by Baron de Soden, Privy Councillor of Lega- 
 tion at Paris. 
 
 To meet this array of influential men, France had chosen 
 the Marquis de Moustier, Minister of Foreign Affairs; Es- 
 quirou de Parieu, Vice-President of the Council of State; 
 Lavenay, President of the Section of Finance in the Council 
 of State; Ilerbet, Director in the Department of Foreign Af- 
 fairs; and Dutilleul, Director in the Department of Finance. 
 The invitations to the conference had announced that the 
 Marquis de Moustier and Rouher, the Minister of Finance, 
 would preside jointly over the assembly, the vice-presidency 
 devolving upon Parieu, so that the conference was officered by 
 Napoleon without putting it to the trouble of choosing for 
 itself. The usual courtesy prevailing in such bodies would 
 doubtless have resulted in the choice of one of the French dele- 
 gates to the presidency, though the same courtesy might have 
 given the vice-presidency to some other country. The Mar- 
 quis de Moustier was present at the opening of the conference, 
 but its direction was immediately left to Parieu, who had 
 probably made a more extended study of the subject of inter- 
 national coinage than any delegate there, had been Napoleon's 
 chief agent in effecting the Latin Union, and in getting the 
 international programme into shape, and who, in the chair, 
 seconded by his associates on the floor, was entirely competent, 
 as well as determined, to promote the interests of France and 
 the desires of Napoleon. He was a member of the Institute, 
 and, as a prolific contributor to the French reviews on mone- 
 tary subjects, had gained a wide reputation. 
 
 It will appear that the Latin Union, considering the lead- 
 ing part taken by delegates from the countries composing it, 
 was ably represented. The French and Swiss delegates to- 
 gether were quite sufficient to meet any criticism <jr handle
 
 PARIEU PROCEEDS TO BUSINESS 51 
 
 any opposition that might be raised to the system of the Latin 
 Union. Six of the nine delegates to the conference of 1865 
 were in this conference, one of them in the chair, and none on 
 the floor had greater influence than Feer-Herzog. A majority 
 of the other delegates were either members of the international 
 committee or commissioners to the exposition. The French 
 government was familiar with their views. 
 
 International uniformity in the world's coinage was the 
 great object in the minds of these notable representatives of 
 nearly all Christendom, assembled in the hotel of the French 
 Foreign Department on this June morning. They little 
 dreamed of the great economic problem soon to be precipitated 
 on the world largely by their deliberations. In opening the 
 conference the Marquis de Moustier stated that the approxi- 
 mations which late commercial reforms had wrought between 
 the economic interests of nations ought to result in a more 
 earnest appreciation of the advantages to be derived from the 
 unification of coinages. " To substitute for the variety of 
 monetary types actually in use metallic coins struck in ac- 
 cordance with uniform regulations and placed beyond any va- 
 riations in exchange would remove one of the most serious ob- 
 stacles to the development of international relations." With- 
 out further generalities, he called attention to the Latin Union 
 and to the suggestion for " a more extended association." iSTo 
 time, he said, " could be more favorable to the realization of 
 this wish than that of the Universal Exposition; the govern- 
 ment of the Emperor hastened to avail of it." After other 
 pleasant words concerning the delegates and the happy auspices 
 under which they assembled, he introduced Parieu, who would, 
 he said, " cheerfully direct the labors of the conference." 
 
 Parieu at once proceeded to business like a man who had 
 previously considered and knew exactly what he proposed to 
 do. He suggested that the preparation of heads of inquiry to 
 serve as the basis of deliberations be confided to a sub-corn-
 
 52 THE CONFERENCE OP 1867 
 
 mittee, and that it be composed of seven members representing 
 the three groups into which the states were divided from a 
 monetary point of view, having adopted respectively the gold 
 standard, the silver standard, and the double standard. The 
 suggestion was seconded by Herbet, also of France, and For- 
 tamps, of Belgium. Baron de Hock, of Austria, and Dr. Kern, 
 of Switzerland, suggested, further, that it would be convenient 
 to devolve on Parieu and Herbet the duty of selecting the 
 sub-committee, and, on the motion of the Marquis de Moustier, 
 this action was taken. It was perhaps natural that France, 
 having called the conference, should take the lead in fixing 
 a basis for deliberations ; at any rate, Parieu kept his hands well 
 on the progress of organization. In this, it may be noticed, he 
 was assisted by delegates from his own government and those 
 of Belgium and Switzerland, all of the Latin Union, and b\ 
 the representative of Austria, which was peculiarly close to 
 France politically at that time; indeed, Baron de Hock had 
 already arranged a provisional treaty for the alliance of his 
 government with the states of the Latin Union. 
 
 Parieu and Herbet were ready with the sub-committee in a 
 few minutes. To represent the countries with a gold standard, 
 they chose Graham, of England, and Count d'Avila, of Portu- 
 gal then the only two countries in Europe having the gold 
 standard; to represent the countries with a silver standard, 
 Baron de Hock, of Austria, and Meinecke, of Prussia; the 
 countries with a double standard, Jacobi, of Russia, Rugglcs of 
 the United States, and Parieu, of France. This was a fair 
 committee to all appearances, and, perhaps, it was in fact. 
 But Parieu had had facilities for knowing in advance the in- 
 clinations of the majority of these delegates. Count d'Avila 
 and Ruggles had, as commissioners to the exposition and as 
 members of the international committee, both expressed a de- 
 sire to see monetary unity effected with the system of the Latin 
 Union as the basis and gold as the standard. Austria, as has
 
 HEADS OP INQUIRY 53 
 
 been seen, was friendly. It was generally believed that Prus- 
 sia had been considering the policy of joining the Latin Union 
 with its allied states, as Senator Sherman had remarked in his 
 note to Kuggles. So there is reason to suppose that Parieu 
 and Ilerbet, in choosing this committee, were confident that 
 it would not run counter to the hidden wishes of France, 
 whether they were suspected or not. 
 
 The sub-committee met the next day at the Council of 
 State, and the day after, the 19th, laid its proposed heads of 
 inquiry (questionnaire) before the conference in printed form. 
 " You have been pleased," said Parieu in opening the session, 
 " to charge me with the preparation of a detailed programme 
 of your labors, with the collaboration of six members of your 
 conference, representing the more considerable states in the 
 diverse groups among which the fundamental money systems 
 of the world are distributed." Regarding the spirit in which 
 the questions had been drawn up he said that the mone- 
 tary systems in use among the various nations showed ac- 
 cidental varieties, traceable to chance and former isolation, 
 but having also some relation to the economic condition 
 of the countries in which they had been carried into prac- 
 tice. In this situation, it had seemed to the committee 
 that monetary unifications could be realized only in the pro- 
 portion in which these economic conditions could be approxi- 
 mated. " To discern, on the one side, what relates to the cir- 
 cumstances affecting the economic history of nations," he con- 
 tinued, " and, on the other, that which is fundamental in mon- 
 etary science, is now our main endeavor; for if individuals and 
 nations separate on what may rest on arbitrary will or caprice, 
 they easily come together on a true and calm consideration of 
 their situations. Notwithstanding this conviction, we have not 
 been willing that all the doctrinal and scholastic questions per- 
 taining to monetary science, a science still imperfect, should be 
 textually laid down in the programme of your labors. They
 
 54 THE CONFERENCE OF 1867 
 
 may present themselves incidentally, and, to a certain extent, 
 are tacitly included. The questions we have the honor to 
 submit to you all have a practical character, which we hope 
 will meet your approval, as circumscribing difficulties and per- 
 haps avoiding some idle problems." 
 
 These were the questions: 
 
 " I. By what means is it most easy to realize monetary unifica- 
 tion, whether by the creation of a system altogether new, independ- 
 ent of existing systems and in such case what should be the basis 
 of such system ? or by the mutual co-operation of existing sys- 
 tems, taking into account the scientific advantages of certain types 
 and the number of the populations which already have adopted 
 them? In this case, what monetary system should be principally 
 taken into consideration, reserving the changes of which it might 
 be susceptible for making it perfect? 
 
 " II. Is there a possibility of establishing at this time identities 
 or partial coincidences of monetary types on a wide scale, on the 
 basis and with the condition of the adoption of the silver standard 
 exclusively? 
 
 " III. Is there, on the contrary, a possibility of attaining this re- 
 sult on the basis and witn the condition of the gold standard ex- 
 clusively ? 
 
 " IV. What of the like result in proceeding on the ba.sis and with 
 the condition of the adoption of the double standard, with the es- 
 tablishment of an identity of relations in all countries between the 
 Talue of gold and the value of silver? 
 
 " V. In case of a negative on 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 to simultaneously regu- 
 late the standard of gold? 
 
 " VI. Would it be more possible and more beneficial to establish 
 identities or partial coincidences of gold coins, leaving each state 
 to regulate the standard of silver? 
 
 " VII. On the hypothesis of the affirmative solution of one of the 
 two preceding questions, and following the distinctions which that 
 alternative imports, would the advantage of internationality, which 
 coins of the metal taken as the common standard would require, 
 be a sufficient guarantee for their being kept in circulation in 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 the international coins would run the 
 risk of being completely expelled from circulation in some of the 
 contracting states? 
 
 " VIII. Is it necessary to the success of monetary unification to 
 constitute at this time a unity everywhere identical for metallic 
 composition, weight, and denomination; and in that case upon what 
 basis? 
 
 " IX. Would it be of advantage, in case gold should be adopted 
 as the international metal, that the types of that money, determined 
 by the monetary convention of the 23d of December, 1805, to promote
 
 SHAPED FOR NAPOLEON'S AMBITION 55 
 
 unification and consequent reciprocity, should be completed by new 
 types; for example, by coins of fifteen francs and of twenty-five 
 francs? In this case, what should be their dimensions? 
 
 " X. Would there be an advantage, under certain hypotheses 
 for example, in case of the affirmative on questions III. or VI. 
 to regulate by common obligations certain points relating to silver 
 coins or base coin, either in regard to their composition and standard 
 or their limits of admission in payments, or to the quota of issue of 
 each ? 
 
 " XI. Is it practicable to define precisely the means of control 
 which would be established for securing exactness in the striking 
 of the common types of international money? 
 
 " XII. Aside from immediate practical possibilities, the object of 
 the preceding questions, could any ulterior solutions be attained by 
 doctrinal decisions, and on grounds of principle, with a view to in- 
 crease in the future the approximations already effected in the past 
 two years in Europe, or that could be immediately realized in this 
 monetary matter? " 
 
 The guiding genius in the committee which arranged these 
 questions, adopted in conference without debate, was Parieu's. 
 He drafted them himself, and only a few modifications were 
 made in the committee. A man of deep research in monetary 
 matters, and especially in this phase of it, and acting for the 
 government at whose invitation they had assembled, the others 
 of the committee naturally yielded the control of preliminaries 
 into his hands. With politeness and skill he shaped them as 
 favorably as he could for the Latin Union and for Xapoleon's 
 ambition. Having found that the limits of accession to the 
 Union by other countries had been reached, his object was to 
 suggest the easiest means for arriving in conference at the co- 
 ordination of other systems with the French on any metallic 
 standard so long as France was the centre of the unification. 
 
 The first question was well designed for this object. It 
 was no general inquiry for the settlement of a fundamental 
 principle of monetary science. The character of the standard 
 of value was not suggested in it, but was discreetly left till 
 later, for if the gold standard were adopted at first the English 
 system might present stronger claims as a basis for interna- 
 tional unity. It was a thoroughly practical question. To 
 secure monetary unification, should a new system be created? 
 Such an attempt, it was well known, would be beset with
 
 56 THE CONFERENCE OF 1867 
 
 serious, if not insurmountable, difficulties. It would require 
 every state to change its system to something altogether un- 
 tried, to discard that around which popular traditions clustered 
 and into which the habits of the common people were woven. 
 The alternative was, as the question stated, a co-ordination of 
 existing systems, " taking into account the scientific advantages 
 of certain types and the number of the populations " which 
 had already adopted them. The scientific advantage of the 
 French system was its association with the metric system, 
 which had won favorable consideration in every civilized coun- 
 try, and the fact that it was based on the decimal principle; 
 but its principal advantage was that it had been adopted by a 
 population of about 70,000,000 in Europe. The logical, if 
 not the necessary, answer to this first question, therefore, was 
 that the system of the Latin Union " should be principally 
 taken into consideration." With that settled the remainder 
 of the course was clear. While a certain implied endorse- 
 ment might thus be given to the double standard, a single gold 
 standard could be adopted without at all interfering with the 
 pre-eminence of the French system. Whatever, in theory, 
 France might be compelled to yield on this score would not 
 be an actual sacrifice, her metallic circulation being almost en- 
 tirely of gold. The cleverness with which Parieu maintained 
 this position will appear as the discussion is followed. 
 
 At the very beginning an incident occurred showing how 
 closely the French delegates were watching affairs. For- 
 tamps, of Belgium, who was not a member of the sub-commit- 
 tee, expressed a wish to have the question of the standard of 
 value settled first. " It is," he said, " an initiative point which 
 it is convenient to settle at once in order to base the delibera 
 tions on foundations as precise as possible." As a partisan 
 of the gold standard, he was more earnest, even, than he had 
 been two years before in the conference of the Latin Union, 
 and he was impatient to take up arms for gold on a wider field
 
 A NEW OR AN EXISTING SYSTEM 67 
 
 and at once. Herbet, of France, was immediately upon his 
 feet to remark that by reason of the importance of the ques- 
 tion of the standard there would be inconveniences in bringing 
 it at once under discussion. He inferred in one of his state- 
 ments that the Belgian delegates might not have a sufficient 
 understanding of what their government desired on this point, 
 and made the further excuse that the Spanish delegate, who 
 would bring a large experience to bear upon the subject, had 
 not yet arrived. Parieu followed with an explanation that 
 the first question had been framed to embrace an order of ideas 
 much more extensive than the question of standard, which 
 could as well be taken up after the conference had determined 
 whether a new system was desired or a co-ordination of exist- 
 ing systems with some one system as a basis. 
 
 Notwithstanding the precautions of the French delegates, 
 the problem of the standard cropped out, though not in a 
 dangerous manner, in the arguments over the first question. 
 Count d'Avila, of Portugal, considering the difficulties in the 
 way of an entirely new system insurmountable, strongly ad- 
 vocated the second alternative and gratified the French dele- 
 gates by holding that the system of the Latin Union should be 
 taken into especial consideration as a basis for approximations. 
 That done, he declared himself ready to vote for the gold stand- 
 ard, the reduction of the pound sterling to 25 francs, the re- 
 duction of the American dollar to 5 francs, and the adoption of 
 the gold coin of 5 francs as the standard unit. This was prac- 
 tically the programme laid down by the international commit- 
 tee, discussed in the French reviews, and generally received 
 with favor. Xo other practical plan was in the minds of the del- 
 egates, apparently, for none other seemed capable of bringing 
 England, France, and thfe United States into an agreement. 
 It would require the fineness of the English and Portuguese 
 gold coins to be reduced from eleven-twelfths to nine-tenths, 
 and the value of the. American dollar to be reduced about 3
 
 58 THE CONFERENCE OF 18C7 
 
 per cent. Opinion among the commercial bodies in England 
 was favorable to the project, and the opinion of the United 
 States, so far as there could be any under a paper regime, was 
 well expressed in the letter of Senator Sherman. 
 
 Baron de Hock, of Austria, shared in the opinion of Count 
 d'Avila as to the impossibility of bringing about an entirely 
 new system and completely breaking up inveterate habits. 
 He thought also the best basis for the mutual co-ordination 
 of types was the system of the Latin Union, provided it under- 
 went some modifications and the new system rested on the gold 
 basis exclusively. " This metal," he said, in speaking of gold, 
 " which has spread in such considerable amounts through the 
 European market during the last twenty years, would be the 
 most convenient agent for a universal monetary circulation " 
 the argument of plentifulness again. 
 
 Banker Mees, of the Netherlands, said he would have pre- 
 ferred an entirely new system if the unification of coinage 
 could be immediately realized upon it, as it would avoid all 
 national susceptibilities. But he considered that actual and 
 practical results required the adoption of an existing system. 
 Feer-Herzog, of Switzerland, argued that the system of the 
 Latin Union would best assist the equations of the English 
 sovereign and the American dollar. His view was endorsed 
 by Jacobi, of Russia. Dr. Broch, of Norway, favored the sys- 
 tem of the union as a basis also, but said that as Sweden and 
 Norway had a silver standard, and their commerce was princi- 
 pally with Germany, especially Hamburg, their adhesion to a 
 monetary union would depend upon the action of the states 
 of northern Germany. This made the position of those states 
 important. 
 
 Meinecke, the Prussian delegate; spoke for them. He con- 
 sidered it of prime necessity to adopt as the base of the new sys- 
 tem one already recognized and reduced to practice. He did 
 not pretend, he said, to ask the sympathies of the conference
 
 ATTITUDE OF PRUSSIA, ENGLAND, AND THE UNITED STATES CQ 
 
 in favor of the Prussian monetary system, for lie did not believe 
 that the standard of gold could be replaced in the countries 
 which had adopted it by the standard of silver in force in 
 Prussia. His country, he thought, was content with its stand- 
 ard, and there was no urgent necessity for a change so radical 
 as the adoption of the gold standard, an operation which in 
 any case would be difficult, but his government would, never- 
 theless, study with care the best means of joining a monetary 
 union, though it would be necessary to have the concurrence 
 of its Northern confederates, and also of the Southern states, 
 co-signers in the treaty of 1857. With these reservations, he 
 was ready to take part in the discussion and vote. It was evi- 
 dent that the Prussian delegate had received instructions not 
 to commit himself too far until he saw the outcome of the dis- 
 cussion. It is doubtful if he could have imagined that in four 
 years the silver standard, with which, he said, Prussia was 
 content, would be discarded for gold, that his king would be 
 declared the Emperor of united Germany in the palace at 
 Versailles, and that Xapoleon, who had just been riding 
 through the streets of Paris with King William, would be a 
 refugee from that France which was then celebrating the glory 
 of his reign. 
 
 The English delegates said very little upon the subject. 
 In reply to a statement made by Feer-Herzog that sovereigns 
 actually in circulation might be kept so because of the trifling 
 difference separating them from a 25-franc piece, Graham said 
 that, even if it were true that the difference in value was almost 
 comprised within the limits of tolerance, it would be equally 
 true that his government would make it a point of honor not to 
 avail itself of these limits. He feared such a change might 
 lead to the abandonment of the sovereign, and he considered 
 the immediate adoption of the French system preferable. 
 
 The American delegate explained his position at con- 
 siderable length, and it is beyond question that he faithfully
 
 60 THE CONFERENCE OF 1867 
 
 represented the opinion of the leading authorities of his coun- 
 try at that time. It would be as impossible, he said, to abolish 
 the expression of the dollar in the United States as that of the 
 sovereign in England. His plan would be to retain both by 
 reducing their intrinsic value. For the sovereign it would be 
 a reduction of only 20 centimes; for the dollar, on the other 
 hand, the reduction would be 3^ per cent, of its value. He as- 
 sured the conference that his government was ready to make 
 this sacrifice in view of monetary unification, such being the 
 opinion of the American people, and after the following winter 
 a general reminting of coin might commence. He argued 
 strongly that all reminting should be done then or never, for 
 gold coinage was rapidly increasing everywhere, and, if con- 
 tinued, the time would come when reminting would be impossi- 
 ble because of the expense. The United States, from 1793 to 
 1849, had actually coined but $85,000,000 of gold; in 1850 
 and 1851 alone, $94,000,000; and from 1851 to 1866, they 
 had coined $665,000,000. During this last period of fifteen 
 years France had coined about $995,000,000 of gold, and Eng- 
 land $450,000,000. He considered it quite possible that in 
 the United States in the fifteen years to follow the gold 
 coinage might reach five milliards of francs. 1 Obviously, then, 
 the United States preferred to reduce their unit at once. A 
 few words, he said, reducing the weight of the gold dollar 
 would change the whole monetary system; but his government 
 expected that France, on her side, would coin gold pieces of 
 25 francs. In that case he thought monetary unification would 
 assume a practical form. 
 
 Parieu called special attention to the favorable attitude of 
 the United States, and said in regard to the wish expressed for 
 the creation of a 25-franc piece in France that the matter had 
 been given a place in the inquiry and would be discussed later. 
 Graham, the English delegate, observed that as there was an 
 
 i From 18H8 to 1883 the total prold coinage of the United States 
 amounted to $032,720,112, or about three milliards of francs.
 
 THE ECONOMICALLY IDEAL PLAN 61 
 
 identity of coin between Canada and the United States, if the 
 latter should approximate to the French monetary system, 
 Canada would, of necessity, follow the example. 
 
 It may at first seem remarkable that the only delegate rais- 
 ing objections to the adoption of the system of the Latin Union 
 as a basis for unification was Stas, of Belgium, a party to the 
 union. But political and financial leaders in that country 
 had quite generally followed the opinion of a certain school of 
 economists, important because of the scientific authority of its 
 adepts, which would admit no other monetary unity than a 
 metric unity in round numbers, and which had proposed to take 
 for the unit a weight of five grams of gold of nine-tenths fine- 
 ness. It was the economically ideal form of monetary unity, 
 and had been urged with great ability in the reviews. Stas 
 was a believer in it, and so preferred the establishment of an 
 entirely new system, essentially French, but based on a differ- 
 ent metric unit, thereby, as he held, settling principles rather 
 than expedients in practice. To follow the latter course, he 
 said, would be to leave traces in snow, not to engrave footprints 
 in rock it would not create anything durable ; on the 
 contrary, it would prepare difficulties, for future monetary 
 unification, he held, would only be reached by first laying down 
 an immovable basis. In his opinion the creation of a system 
 based on a unit of gold of 5 or 10 grams would offer the im- 
 mense advantage of having it more readily accepted by all 
 nations, as it would avoid all national susceptibilities; and, 
 while the adoption of the new unit would require the general 
 reminting of all coinage, it would bring with it a definite sys- 
 tem, sanctioned by science. Stas designated certain difficul- 
 ties in the effort to approximate to the existing French coinage. 
 The coin of 25 francs, for example, would be inconvenient in 
 divisions the half would be 12 francs 50 centimes, a 
 number already fractional. In his view, there did not really 
 exist pieces of 20 francs, 10 or 5 francs, seeing that no piece of
 
 62 THE CONFERENCE OP 1867 
 
 20 francs was exactly the 155th part of a kilogramme. Mathe- 
 matically speaking, the kilogramme could not be divided into 
 155 equal portions, and, with stronger reasons, Stas held that it 
 could not be divided in the order of material facts; but it would 
 not be so with a perfect metric unity of gold, and he, therefore, 
 concluded that only by a new system could there be a reason- 
 able hope of the establishment of a common measure of values 
 in the various countries. He urged that he spoke disinter- 
 estedly as a representative of one of the governments, co- 
 signers of the agreement of 1865. 
 
 From a purely scientific point of view, Stas and his school 
 of economists were undoubtedly right, and the conference was 
 well aware of it. But it was practically impossible. Any 
 other system than the French was exactly what Napoleon did 
 not desire as a basis ; and if there was any possibility of securing 
 the co-operation of England, it must have vanished under the 
 requirement of doing away with its distinctive coins, while 
 Ruggles was maintaining that it would be impossible to abolish 
 the expression of the dollar in this country. The impossi- 
 bility of the theoretically proper has often been demonstrated 
 in monetary conferences, all of which, when called to establish 
 a condition based on theory, have failed. 
 
 As soon as Stas had taken his seat, Parieu asked signifi- 
 cantly if he had spoken in the name of Belgium, or had simply 
 expressed his own opinion. Fortamps replied for Stas that 
 the opinion the latter had given was shared by the ministers of 
 finance in Belgium, but that his government would not, of 
 course, refuse to acquiesce in other propositions adopted by the 
 conference. There was, therefore, no serious trouble for 
 France to fear from that quarter. Feer-Herzog, undertaking 
 to meet the scientific objections raised by Stas, said that even 
 the metric system could not claim scrupulous respect for its 
 smaller parts, the basic meter not possessing that sure scientific 
 quantity of length which constituted its definition the terres-
 
 SYSTEM OP THE LATIN UNION ADOPTED 63 
 
 trial spheroid, according to one of the dimensions of which 
 the meter was calculated, presenting irregularities making the 
 absolute mathematical perfection Stas sought for impossible. 
 Nevertheless, the system presented great advantages over any 
 other, and thus it was not indispensable to the goodness of coin 
 that it should be metrically proportioned. 
 
 At the conclusion of this discussion, of which these were 
 the main features, Parieu called for a vote on the propositions 
 in the first question, each state having one vote. The proposi- 
 tion for the adoption of a new system was rejected without a 
 dissenting voice; the Belgian delegates, finding themselves 
 alone, remained quiet. The policy of the mutual co-ordination 
 of existing systems was unanimously adopted. Then Parieu put 
 the question as to what existing system should be principally 
 taken into consideration, it being understood that the vote did 
 not determine the matter of the metallic standard, and the con- 
 ference, without any dissent, expressed itself in favor of the 
 Latin Union. The only reservations came from the German 
 states, which were bound by the treaty of 1857, and must 
 in final settlements act together. So far, therefore, every- 
 thing had progressed favorably for Xapoleon and his am- 
 bition to spread the Latin influence permanently over the 
 money of the world. 
 
 When the conference met the next day, it at once took up 
 the questions from II. to VII. inclusive, squarely raising the 
 subject of the metallic standard. They in effect asked whether 
 it were possible to constitute identities or partial coincidences 
 of monetary types on the silver standard exclusively, or on the 
 gold standard exclusively, or on the double standard; and, in 
 case of a negative in each instance, whether such identities or 
 partial coincidences could be established on the basis of silver 
 coins, leaving each state at liberty simultaneously to regulate 
 the gold standard, or, on the basis of gold coins, leaving each 
 state at libertv to regulate the silver standard.
 
 64 THE CONFERENCE OF 1867 
 
 Only one delegate, Mees of Holland, raised objections to 
 the general adoption of the gold standard. While avowing 
 himself a partisan of a single standard for each particular 
 state, he thought that serious inconvenience would arise if all 
 the nations in Europe adopted the same standard, either silver 
 or gold, for, in his opinion, it would exclude entirely from 
 European circulation one of the two metals. Representing a 
 state whose currency rested on silver, he did not maintain that 
 it would be properly adopted in preference to gold; he simply 
 did not admit either the gold or silver standard exclusively, 
 and he would not, he said, advocate the double standard unless 
 a universal monetary union was formed, an hypothesis the 
 realization of which was too remote to be considered. 
 
 The delegates from Switzerland and Belgium, countries 
 having the double standard, and those of Austria, Prussia, 
 Sweden, and Norway, having the silver standard, all advocated 
 gold. Feer-Herzog said that gold was the only practical basis 
 for a monetary union. As to the fear expressed by Mees of 
 the total disappearance of silver, in case of the adoption of the 
 gold standard exclusively, he claimed that it was not founded 
 on an exact appreciation of the situation. " The world is 
 divided in its monetary relation," he said, " into two consider- 
 able and very distinct groups; on the 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 monetary system of Switzerland, he said, was necessarily 
 subordinate to that of France and other neighboring states, 
 but all the sympathies of the Swiss government were for the 
 gold standard. Baron de Hock, of Austria, likened the double 
 standard to opium it might be a useful medicine in some 
 cases, but, if used every day, it would become a poison; it
 
 ALL BUT HOLLAND FOR GOLD 65 
 
 might be useful in financial crises but it would be inconven- 
 ient for general use on account of the daily changes in the 
 relative value of the two metals. Its influence was evil on the 
 Bourse, he held, the fall in stocks always being greater in 
 countries of the double standard than in those where a single 
 standard prevailed. Fortamps said that the Belgian govern- 
 ment, having long been a partisan of the silver standard, had, 
 in view of the effects which had taken place in the monetary 
 circulation of Europe, come to consider the gold standard as 
 the only one that should be adopted. The Prussian delegate 
 said lie should vote for the principle of the gold standard, but 
 added that for countries like Prussia, having the silver stand- 
 ard, it would be necessary to prepare the change from one 
 standard to the other by measures of transition. The Swedish 
 delegate reviewed the conditions of the currency in his coun- 
 try, on a silver basis, and declared that for international pur- 
 poses the gold standard appeared to him necessary. Dr. 
 Broch, of Norway, was even more radical, asserting that gold 
 should not only be the sole standard, but that free coinage of 
 silver should be prohibited in countries where that standard 
 prevailed. He followed this with a remark which was certainly 
 prophetic : " In some countries," he said, " any person can 
 take bar silver to the mint and have it coined at a small cost. 
 Individuals should 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 
 should be made now for the 5 francs of the convention of 
 1865. If such a precaution is not taken and a sudden revo- 
 lution renders silver more abundant than gold in Europe, the 
 same difficulties that now exist from the expulsion of silver 
 would then happen inversely. So private persons ought only 
 to be allowed to coin their gold." 
 
 In stating the position of the United States, Ruggles said 
 that the double standard did not practically exist there. " The 
 5
 
 66 THE CONFERENCE OF 1867 
 
 original act of Congress," he explained, " 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 pay- 
 ments, 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 7 per cent, in the weight 
 of the fractional pieces of the silver dollar and by the declara- 
 tion that all the divisional coins which should subsequently 
 be struck should be a legal tender only for payments of debts 
 not exceeding $5. It is true that the silver dollar is still re- 
 tained as lawful money for debts of any amount; but of a total 
 silver coinage of $136,351,512, only $4,366,340 are in dollars, 
 while $131,985,472 consist of subdivisions of the dollar. Al- 
 most 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 the 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 fifty-six years which 
 immediately preceded the year 1850, the United States coined 
 in gold $85,588,038, and in silver $75,322,969, which rep- 
 resents a supply of about lyrfV of gold to each dollar of 
 silver. From 1850 to 1866, inclusive, the coinage of gold 
 has been $759,648,453, and of silver $59,027,843, which rep-
 
 SILVER STANDARD REJECTED 67 
 
 resents about $12.50 in gold to $1 in silver. 1 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 throughout the civilized world, that it is 
 impossible to establish a double standard which must presup- 
 pose a fixed relation between the two metals." 
 
 With England, Prussia, Austria, the United States, and the 
 smaller powers determined in favor of the gold standard, and 
 France ready to accept it cheerfully so long as French coins 
 were made the basis of arrangements, the Dutch delegate, who 
 had suggested that it might be impracticable and unwise to 
 have all the nations adopt the same standard, found little hope 
 of support. The nearest approach to it came from Jacobi, of 
 Russia, who could not perceive the necessity of agreeing upon 
 one standard or the other. He thought it would be sufficient 
 to stipulate that such and such coins should be received and ac- 
 cepted as legal coins, each state remaining in other respects 
 free to strike other coins according to the convenience and 
 necessities of its internal transactions. But the French dele- 
 gate, Lavenay, at once pointed out that this would not do. The 
 government of a state on a silver standard, for example, strik- 
 ing legal coin only in that metal, could hardly consent to give 
 a legal character to foreign gold, and its public banks could not 
 be compelled to take metallic specie which their government 
 had prohibited for its own issues. Moreover, the foreign coin, 
 said Lavenay, might drive out the national coin, thus giving 
 preference to a metal the state had discarded. Parieu and 
 Feer-Herzog added some further objections to Jacobi's idea, 
 
 i The clever bimetallist of to-day would somewhat weaken the 
 force of this statement by simply referring to the tables of the com- 
 mercial ratio of silver to gold and pointing out that, while the pro- 
 portion of production between the two metals so radically changed, 
 the average commercial ratio of silver to gold was 15.40 to 1 for the 
 seventeen years 1850 to 1800. and 15.81 to 1 for seventeen years pre- 
 vious to 1850 a difference of only ^j. This variation, however, was 
 sufficient to produce the results Ruggles described.
 
 68 THE CONFERENCE OF 1867 
 
 which would, they evidently thought, weaken the French 
 basis of the proposed unity. Parieu proposed a vote on the 
 third question, for the adoption of the silver standard ex- 
 clusively, and the conference unanimously rejected it. 
 
 Lavenay then observed that, the general opinion of the 
 conference seeming to be for gold as the standard, the only 
 difficulty remaining was as to transitory measures, by which 
 states not maintaining that standard could gradually come to 
 it. These measures gave rise to considerable discussion. The 
 Prussian delegate desired that the silver-standard countries 
 be given an opportunity to adopt the double standard tem- 
 porarily before going entirely to gold. Parieu agreed with him. 
 The fact that it was much easier for a government to desire 
 a gold standard than to actually reach it was somewhat em- 
 barrassing and was not altogether agreeable to France. Fi- 
 nally, the question was modified so as to read as follows: " 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? " Every state 
 voted in the affirmative, with the exception of the Xetherlands. 
 Mees said he considered that the adoption of the gold standard 
 by all countries w r ould reduce silver to change money, and that 
 consequently gold would rise. Moreover, he thought a mone- 
 tary union not very certain to be adopted, and that the labor 
 of the conference, to use one of Parieu's figures, was " only a 
 seed sown, the germination of which cannot be foreseen." 
 Mees seems to have possessed a prophetic vision somewhat 
 superior to that of other delegates. But, in the abundance of 
 gold, his fears seemed to them to be based on a theory con- 
 tradicted by the practical facts of the situation. Yrolik, the 
 other representative of Holland, excused himself from voting 
 in the affirmative, on the ground that the question seemed tc 
 imply a fixed time in advance when the silver standard every- 
 where must give place to gold. He would have voted for it,
 
 METHODS OP TRANSITION 69 
 
 lie said, had each state been left the judge of the time it should 
 keep another standard. But if the states adjoining Holland 
 came to a mutual understanding, Holland would be forced to 
 imitate the example. His position was very much that of 
 Mees, except more disingenuous. 
 
 By this vote questions IV. and V. were practically solved 
 in the negative that is, the double standard and the proposi- 
 tion to establish identities or partial coincidences of monetary 
 types on the basis of silver coins, leaving each state at liberty to 
 regulate the gold standard, were rejected. Question VI. was 
 suppressed by reason of the modification adopted to the third 
 question. 
 
 At the fourth sitting, on June 21st, a long discussion took 
 place relating to the nature of the necessary transition from the 
 silver and the double standard to the gold. Much difference 
 of opinion was manifested over the question whether a fixed 
 relation between the two metals should be established. By 
 the adoption of the gold standard the seventh question really 
 took this form: Would the advantage of internationally, 
 which gold coins 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 gold and silver, or for the case where inter- 
 national coins would incur the risk of being completely ex- 
 pelled from circulation in some of the contracting states? 
 Parieu said that the sub-committee had prepared this question 
 in anticipation of a possible adoption of the double standard, 
 but as the conference had decided for a gold standard, and that 
 the double standard must be transient, he should consider it 
 wise if the conference should declare a certain minimum, below 
 which the relations between gold and silver should not be fixed. 
 But the Belgian and i^Tetherland delegates thought it better 
 to leave each state to settle the relation for itself. Lavenay, 
 the French delegate, was inclined to agree with them, for, he
 
 70 THE CONFEKENCE OF 1867 
 
 said, all international negotiations would be transacted in gold, 
 and, if a state established a bad tariffication of coins, gold would 
 not go there. The Austrian delegate agreed with Parieu that 
 some principle for transitory measures should be sanctioned by 
 the conference, but he thought it difficult to fix a limited mini- 
 mum relation between the two metals for the states with a 
 silver standard. He considered it better to adhere to a certain 
 generality, and, for that reason, he proposed the following 
 substitute for the seventh question: 
 
 " The advantage of internationality, which coins would acquire 
 from the metal adopted as a common standard, would not be a suffi- 
 cient 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 question was a difficult one. The members of the 
 conference appreciated that they were in deep water. For 
 the first time the French delegates showed that they were not 
 sure of their position and their opinions did not always coin- 
 cide. Parieu said he would willingly adopt Baron do Hock's 
 proposal for countries of a silver standard, but he doubted if 
 it would suit countries with a double standard which had long- 
 had a legal relation between gold and silver, and it would be 
 difficult to suppose that on adopting a gold standard they 
 would modify their metallic relations so as to drive gold out of 
 circulation. The French delegate, Ilerbet, thought the ques- 
 tion could come up in special conventions later and be settled 
 by delegates authorized to do so. Ruggles asked that the vote 
 be postponed till the next sitting, as he did not clearly see the 
 effect of the amendment. Parieu was, nevertheless, disposed 
 to put the proposition to vote, the delegate from the United 
 States giving his adhesion or refusal some other time. Dr. 
 Kern thought Baron do Hock's proposition a happy com- 
 promise of diverging opinions tending to the same end and dif- 
 fering only in comprehensiveness ; for the good of the confer-
 
 NO LEGAL RATIO FOR THE UNITED STATES 71 
 
 * 
 
 ence, he thought the vote should take place immediately. Rug- 
 gles excused himself from voting because, he said, he did not 
 understand the question. The United States, he told the con- 
 ference, would not consent to accept any fixed relation between 
 gold and silver, for the double standard would be abolished 
 only when no such relation existed. Parieu maintained that 
 the double standard still existed in the United States, and, of 
 course, the relation between gold and silver, which was 1 to 16. 
 Ruggles replied that, while legislatively the double standard 
 existed, it was virtually abolished in practice, and " hence the 
 United States has the gold standard alone." 
 
 " Reasoning in that way," returned Parieu, " as France 
 coins a less number of 5-franc pieces than America does dol- 
 lars, we might say, like Mr. Ruggles, that France has the gold 
 standard alone, and that is what nobody would assert." 
 
 Jacobi remarked that the United States must clearly be 
 considered as having the double standard, unless a law was 
 passed prohibiting the coinage of silver dollars. There was 
 a further running debate on the subject, resulting only in 
 greater confusion and doubt in the minds of the delegates. 
 Finally, Parieu put the Hock proposal to vote, and it was 
 adopted without dissent. Ruggles, how r ever, withheld his vote, 
 and the Prussian delegates did not vote, declaring that their 
 instructions did not permit them either to discuss or to vote 
 upon transient measures which might require the co-operation 
 of their Northern confederates. 
 
 Though the difficulties of the question were thus avoided 
 in the conference, it must have been evident to all the dele- 
 gates that they could not be thus avoided in any fixed inter- 
 national agreement. It would have been necessary, had the 
 acts of the conference assumed practical form later, to create 
 some sort of a system. It would have proved vain to have de- 
 cided upon an international money of gold without fixing a 
 relation for it with the silver money in states where the
 
 72 THE CONFERENCE OF 1867 
 
 double standard was transitory, for, with the relation between 
 the two metals differing in different countries, and, as gold 
 comes in more readily when the coefficient of silver is higher, 
 countries in a transitory situation would find themselves at an 
 advantage according to the ratio they maintained. But the 
 delegates saw that the subject was best avoided for the time 
 for the sake of securing as complete an agreement on principles 
 as possible, leaving to the future the settlement in some way 
 of vexatious details. The question was one that the American 
 delegate could not easily appreciate. His country had no cir- 
 culation in silver and its condition was altogether different 
 from that prevailing among the states of Europe, so closely 
 situated that a variation in the lawful ratios of different states 
 might have made the circulation of an international gold coin 
 impossible in some countries and deprived them of the benefits 
 of internationality. But the United States government, as 
 represented by Ruggles, saw in the question of fixing a ratio, 
 or fixing it within certain limits, the possibility of prolonging 
 the double standard, something that it scorned in any form. 
 It desired no ratio between gold and silver, except such as 
 commerce proclaimed from time to time. Its policy was the 
 gold standard without compromise, and so, without instructions 
 as to ratios, Ruggles was at a loss to find his position on a 
 matter which would affect the European states, even if they 
 adopted the gold standard. 
 
 Jiapoleon was highly pleased with the course events 
 had taken thus far, and sought for some way to give to the 
 conference an impressive expression of his imperial gratifica- 
 tion. The Marquis de Moustier, Minister of Foreign Affairs, 
 had made a formal report to him, speaking of the eagerness 
 with which the sovereign states of Europe and the government 
 at Washington had sent delegates to the conference and of its 
 bright prospects. It was published in The Mointcnr of the 
 26th, on which day the conference reassembled. With it
 
 PRINCE JEROME APPEARS 73 
 
 appeared Prince Jerome ISTapoleon, whom the Emperor had 
 appointed to preside, as a mark of his imperial favor. In tak- 
 ing the chair the Prince complimented the conference on its 
 progressive ideas and 011 the course it had taken, and expressed 
 the hope that it would continue its labors so well begun. 
 Parieu responded by assuring the Prince how highly honored 
 the conference felt by the presidency of His Imperial High- 
 ness, and the Count d'Avila proposed that an address, ex- 
 pressing the profound gratitude of the conference, be pre- 
 sented to the Emperor. The proposition was, of course, ap- 
 proved and given to Parieu for transmission. 
 
 But. it is doubtful if this mark of approval had quite the 
 effect the Emperor intended or desired. The English dele- 
 gates had said very little up to this time, but had voted, for the 
 several propositions which the conference had adopted. As 
 soon as the formalities in honor of the Prince were concluded, 
 and he had announced that the next question would be taken 
 up, Rivers Wilson arose and read the following declaration : 
 
 " Before recommencing the discussion of the list of questions, 
 the English delegates deem it their duty to the government they 
 represent, to the members of the conference, and particularly to the 
 government of the Emperor, by whose invitation they are present, 
 and to prevent any misunderstanding, to indicate their delicate and 
 exceptional situation. They are convinced of the necessity of this 
 declaration, from the serious and practical turn the discussion has 
 borne to this time, and particularly from the high signification that 
 must attach in public opinion to the presidency of His Imperial 
 Highness, Prince Napoleon, and to the labors that must result from 
 it. 
 
 " The English government was obliged to accept the cordial invi- 
 tation from the government of the Emperor to participate in this 
 conference, because a refusal would have shown a want of courtesy, 
 and would have made it liable to accusations of prejudice upon this 
 very important question. 
 
 " Indeed, the English nation is in a position much more inde- 
 pendent upon this question than most Continental nations. 
 
 " So long as public opinion has not decided in favor of a change 
 of the present system, which offers no serious inconveniences, 
 either in wholesale or retail trade, and until it shall be incontestably 
 demonstrated that a new system offers advantages sufficiently com- 
 manding to justify the abandonment of that which ^s approved by 
 experience and rooted in the habits of the people, the English 
 government could not believe it to be its duty to take the initiative
 
 74 THE CONFERENCE OP 1867 
 
 in assimilating its coinage with those of the countries of the 
 continent. 
 
 rt But the English government will always be ready to aid any 
 attempt to enlighten and guide public opinion in the appreciation 
 of the question, and facilitate the discussion of the means by which 
 such an assimilation, so advantageous in theory, may be effected. 
 
 " Thus, while consenting to be repie&euted in this conference, 
 the English government has found it necessary to place the most 
 careful restrictions upon its delegates; their part is simply to listen 
 to the different arguments, to study the situation as developed in 
 discussion, and to report to their government. Thus far they have 
 found no difficulty in voting in favor of all the propositions adopted 
 by the conference, because their principles agreed with the system 
 now in force in England. But they cannot vote for any question 
 tending to bind their government or express any opinion to induce 
 the belief that Great Britain would adopt the convention of 1865." 
 
 If the conference had any expectations of accomplishing 
 any practical results, they must have been somewhat shaken 
 by this declaration. It indicated that the English government 
 had little real desire for monetary unity, except on the basis 
 of English coinage, and, apparently, not much for that. The 
 proposition to establish an equation of the coins of England, 
 the United States, and the Latin Union, by reducing the fine- 
 ness of the sovereign, lost much of its practical value by such 
 a declaration. Although one of the French delegates, Herbet, 
 explained that the reserves made by the English delegates were 
 found in Lord Stanley's despatch to the French ambassador in 
 London, announcing England's participation in the confer- 
 ence, it is worth noting that the English delegates did not 
 deem it necessary to inform the conference of their " delicate 
 and exceptional situation " till the presidency had been be- 
 stowed by the Emperor on Prince Jerome. It is possible that 
 Lord Stanley began to feel that England was in danger of mak- 
 ing too cordial a demonstration in the Napoleonic monetary 
 procession. He had learned something about Napoleon's 
 dreams of Latin influence. 
 
 Prince Jerome expressed the opinion, after Wilson had 
 finished, that the labors of the conference were essentially theo- 
 retical ; that practical results must be effected in future inter- 
 national conferences, and that, therefore, the English delegates
 
 ENGLAND'S DELICATE SITUATION 75 
 
 need not fear to express their opinion on any question, since it 
 could not bind their government any more than the opinions 
 of other members. He then announced that the conference 
 would take up the question whether it was necessary for the 
 success of monetary unity to constitute a unity at present, 
 identical everywhere in metallic composition, weight, and de*- 
 nomination, and, if so, what bases should be assigned to it, 
 or was it sufficient to constitute common types, having a com- 
 mon denominator of medium amount, as, for instance, multi- 
 ples of 5 francs for the gold coins. 
 
 But the statement of the English delegates had obviously 
 brought a change over the conference. Count d'Avilla, speak- 
 ing for Portugal, the only other gold-standard country repre- 
 sented in the conference, thought his government would not 
 object to reduce the fineness of its gold coins from .916 to .900, 
 but naturally England would have to set the example. He 
 added that he was not aware of the difficulties in a change of 
 currency for the English system ; in theory, there appeared to 
 be none, to explain the reserve of the delegates from Great 
 Britain. It would be necessary, in his opinion, to change the 
 sovereign, as the United States intended to change their dollar; 
 and, in case England followed the example of the United 
 States, Portugal would naturally come in next, particularly as 
 the pound sterling was legal tender there. If England could 
 not change the fineness of her sovereigns, she should, he 
 thought, allow them to circulate as 25 francs for a time. 
 
 It was the opinion of Baron de Hock and other delegates 
 that the adoption of the French monetary system as a centre 
 for the proposed unification really settled the fineness of the 
 new coins at nine-tenths, but Feer-Herzog held that nothing 
 in the agreement of 1865 could bind this conference. He 
 feared, he said, the frequent mention of that agreement had 
 misled the English delegates, and induced them to declare 
 they could not vote for its adoption by Great Britain.
 
 76 THE CONFERENCE OF 186r 
 
 After much discussion the question was proposed by 
 Prince Napoleon in this form: " Should ther6 be types with 
 a common denominator for weight in gold coins of identical 
 fineness?" It was adopted without dissent. The Prince 
 then proposed a vote of nine-tenths as the fineness of inter- 
 national coins, and that was similarly adopted, Graham of Eng- 
 land explaining that he voted for that degree of fineness only 
 on the hypothesis of an eventual recoinage. 
 
 At the next sitting, on the 28th, the subject of fixing the 
 common denominator was taken up. France, Portugal, Aus- 
 tria, Holland, and Russia advocated the 5-franc piece; Eng- 
 land and Sweden, the 10-franc piece. The conference finally 
 voted, 13 to 2, to adopt the 5-franc piece. England and 
 Sweden voted in the negative. The German states and Bel- 
 gium did not vote. The Belgian delegates considered the 
 5-franc piece too small. The Prussian delegate said he did not 
 know what union money would be best suited for Prussia. 
 The representatives of Bavaria, Baden, and Wiirtemburg 
 stated that, as they were bound by the monetary and customs 
 union of Germany, they felt compelled to leave the states free 
 to act in concert. It is noticeable that the German states be- 
 gan to manifest a decided reserve immediately after the Eng- 
 lish delegates felt it their duty to declare their " delicate 
 situation." 
 
 The discussion then turned to the question whether it 
 would be expedient for the types of the coins determined by 
 the monetary convention of the 23d of December, 1805, for 
 the sake of unification and reciprocity, to be completed by neAV 
 types. The delegate of the United States made a long state- 
 ment in advocacy of the issue by France of a 2 5-franc piece, 
 as a means of securing a coin approximating in value to the 
 half-eagle and the sovereign. He argued that it would not 
 be objectionable, as impairing the symmetry of the metric sys- 
 tem, for France had not, and never had, a gold coin contain-
 
 RUGGLES'S APPEAL FOR A NEW COIN 77 
 
 ing an even number of grammes. Giving statistics of the gold 
 coinage of the United States, England, and France since 1849, 
 he added: " The money of the world must be unified now or 
 never. It is fortunate that the gold sovereign of Great Britain, 
 around which the prejudices of the English people naturally 
 cluster, only requires to be reduced to the value of 25 francs, 
 a diminution of 04 milligrammes in weight of fine gold, being a 
 reduction in value of only twopence, English, or four cents 
 of the United States. In truth, the reduction to be made by 
 Great Britain is less than one-fourth of that required from 
 the United States. It is no fault of France, but her good 
 fortune, that the burden and inconvenience of recoinage, and 
 the modification of contracts, will be almost exclusively borne 
 by the United States and Great Britain, while France, with her 
 six milliards of gold in circulation will share without cost in the 
 general advantage and the honor of having unified the money 
 of the world. It is under these circumstances that it is asked, 
 in the name of the United States, that France, in a spirit of 
 wise liberality, will effectually contribute, as she easily may, 
 to the great work of practical unification, by adding the 25- 
 franc gold piece to her present coins. Such a coin will circu- 
 late side by side everywhere and in perfect equality with the 
 half-eagle of the United States and the sovereign of Great 
 Britain. These three gold coins, types of the great commercial 
 nations, fraternally united and differing only in emblems, will 
 go hand in hand around the globe, freely circulating through 
 both hemispheres without recoinage, brokerage, or other im- 
 pediment. This opportune concession of France to the spirit 
 of unity will complete the work of civilization she has had so 
 much at heart, and will inaugurate that new monetary era, 
 the lofty object of the international conference, and tho 
 noblest aim of the concourse of nations, as yet without parallel 
 in the history of the world." 
 
 Prince Xapoleon replied to this earnest appeal that France
 
 78 THE CONFERENCE OF 1867 
 
 did not object to the proposition to coin the new piece, but, 
 the convention of 1865 being in force, the French government 
 must have an understanding with its associates. He thought, 
 however, that the revision of that diplomatic act, on the point 
 in question, would meet with no difficulty. The Italian dele- 
 gates thought that their government would not object to receiv- 
 ing 25-franc pieces, provided it was not required to coin them. 
 
 Before a vote was taken on the issue of this coin, the con- 
 ference decided that it would be best to act on a general prop- 
 osition as to the currency of coins of one country in other 
 countries, and, finally, one was adopted, declaring that gold 
 coins with the common denominator of 5 francs should have 
 legal circulation in the states mutually bound by the monetary 
 convention. There was no dissenting voice, but, again, Eng- 
 land and the German states declined to vote. 
 
 Returning to the discussion of the 25-franc piece, Graham, 
 the English delegate, expressed the opinion that the intro- 
 duction of this and the proposed 15-franc piece into the French 
 system would make too many pieces and be a defect. He asked 
 if France really intended to coin 25-franc pieces. Prince Na- 
 poleon replied that France, if consulting its own convenience, 
 would not, but to facilitate unification it would make this con- 
 cession to the United States; it appeared also that this coin 
 would equally accommodate England and Austria. The 
 Spanish delegate said it would also accommodate his country 
 
 England, evidently, did not desire to be accommodated. 
 Not unless such a coin was issued by France could England 
 find any practicable way of approximating her coinage to that 
 of the Latin Union, a basis for approximation which the Eng- 
 lish delegates had voted for. Their action seemed to indicate 
 a feeling that the conference had already gone too far to suit 
 them, or that they had discovered Napoleon's motives. The 
 25-franc piece was, however, adopted without objection from 
 any state.
 
 GERMAN STATES SHOW RESERVE 79 
 
 The coinage of a 15-franc piece was especially desired by 
 some states, and suited southern Germany, in case of mone- 
 tary unification. The Prussian delegate said he could no more 
 vote on this proposition than on the others. Monetary uni- 
 formity was certainly desired in Prussia, he said, but all he 
 could do was to vote for the gold standard, though he did not 
 know when or how Prussia would pass from the silver to the 
 gold standard. Dr. Kern complained of the apparent indif- 
 ference of the representatives of certain states as to measures 
 which were clearly intended for their benefit. Without re- 
 gard to preference for his own country, he said, he voted, in a 
 spirit of conciliation, because the delegates from Austria and 
 the United States desired it, conceding a change in their coin- 
 age, and he had believed that England would do the same. 
 But he was surprised to hear the English delegate say that the 
 25-franc piece did not appear to him useful, and he did not 
 see the inconvenience of adopting the 15-franc piece, so long 
 as the states particularly interested, and especially Prussia, 
 would not pronounce in its favor, even theoretically. Rivers 
 Wilson explained that his colleague placed himself in a purely 
 theoretical point of view, when speaking of the 25-franc piece; 
 it would, he considered, be rather injurious than useful to the 
 general economy of the French system, but it would not be so 
 in a monetary union between England and Erance. This was 
 practically equivalent to his saying that he did not expect any 
 such union. 
 
 Prince Napoleon deprecated these disagreements. The 
 aims of the conference were definite and practical, he said, 
 and it was their duty to direct their efforts accordingly. Rivers 
 Wilson replied that England could not but appreciate the in- 
 tention with which it had been proposed to introduce the 25- 
 franc piece, a diplomatic way of saying that England was de- 
 sirous of none of the favors the conference was anxious to 
 accord. Parieu endeavored to pour oil on the troubled waters
 
 80 THE CONFERENCE OF 1867 
 
 by remarking that the 15 and 25 franc pieces would be an 
 " invitation " to the states who thought they were not yet pre- 
 pared to decide. Prince Napoleon suggested that the con- 
 ference vote on the question whether the 15-franc piece should 
 be included in the terms of monetary union or reserved till 
 later. Seven states voted to include at once, seven voted in 
 the negative, and six did not vote. The affirmative votes 
 came from France, Spain, the United States, Greece, Holland. 
 Portugal, and Russia; the negative, from Austria, Baden, 
 Switzerland, Italy, Denmark, Sweden, and Norway. Had the 
 German states manifested the slightest disposition for unity, 
 all of these states would have voted in the affirmative, except 
 Sweden and Norway, whose representatives opposed the crea- 
 tion of too many types. The question of regulating by common 
 obligations the composition, limits of admission in payments, 
 and the quota of issue of silver and base coins was omitted by 
 common consent, as impossible of settlement at that time; so 
 also was the twelfth and last question, which was proposed 
 only for consideration in case the conference could not agree 
 upon any of the principles laid down in the first part of the list. 
 The theoretical work of the conference was practically 
 completed by the unanimous adoption of a proposal by Baron 
 de Hock, of Austria, endorsed by Jacobi, of Russia, relating 
 to the principles involved in the eleventh question as to the 
 practicability of defining precisely the means of control for 
 securing exactness in the striking of the common types of in- 
 ternational money. The measures of verification and control, 
 it was proposed, should be specified in the arrangements be- 
 tween the states, the following principles being fixed : 
 
 " 1. The money shall be coined of its full standard and weight. 
 without abatement for coinage or any remedy; in no case must there 
 be connected any particular interest, in view of any profit, with the 
 fabrication of money. 
 
 " 2. The kilogramme shall be established as a weight for the 
 common coins; the weights used by the mints must be made after a 
 common normal weight.
 
 SEEKING A PRACTICAL AGREEMENT 81 
 
 " 3. Common methods of assay and equal limits of tolerance for 
 standard and weight of the common coins must be agreed upon. 
 
 " 4. Coins of the same value must have the same diameter; they 
 shall bear the date of the year when they were coined. 
 
 "5. When many pieces coined in the same year are found to be 
 defective, by .a process to be agreed upon, the government in de- 
 fault shall call in all the pieces issued in that year. 
 
 "(>. An understanding shall be had as to the methods of with- 
 drawing from circulation all clipped coins, those diminished in 
 weight beyond the limit of tolerance, or those on which inscriptions , 
 have become illegible. 
 
 " 7. It shall be held as a principle that each state shall punish 
 violations of the monetary laws of the other states, as well as 
 infractions of their own laws, and on this principle a monetary cartel 
 shall be agreed upon." 
 
 At the seventh sitting, July 2, the conference undertook 
 to analyze and specify the results of its theoretical labors and 
 to come to an understanding as to the means of arriving at a 
 practical solution. Baron de Hock considered an understand- 
 ing by special conventions with the states of the Latin Union 
 better than for each state to proceed by separate and isolated 
 legislative measures. The entire process, he maintained, from 
 the metallic composition to the means of control, should har- 
 monize, and the monetary regulations in the states of the 
 union should give assurances of stability. To a suggestion 
 that the arrangement for the adoption of the system of the 
 Latin Union did not expressly stipulate the preliminary adop- 
 tion of gold as a standard by its four states, Prince Napoleon 
 replied that it might not be so easy as some thought for the 
 French government to take the lead in the selection of a stand- 
 ard. To adopt gold exclusively would require a modification 
 of the French law, and the subject, of course, would have to 
 be laid before the legislature. The double standard, he said, 
 had many stanch advocates in France, who would certainly 
 oppose the withdrawal of silver from circulation. It would 
 be very useful when the subject was laid before the French 
 legislature for his government to rely on diplomatic arrange- 
 ments, already concluded, showing that the principle of the 
 single gold standard was admitted both in theory and practice 
 6
 
 82 THE CONFERENCE OF 1867 
 
 bj many other states. ISTapoleon, having secured the French 
 system as a basis for unification, was evidently disposed to wait 
 till other states showed a disposition to come to the French 
 system before France assumed the responsibility of going to 
 the metallic standard of other states. The United States dele- 
 gate was of the opinion that the details of the application of 
 the system the conference had adopted could not be settled 
 then, but would have to be regulated by subsequent confer- 
 ences. The adroit Parieu then came forward with a general 
 and harmless proposition, to the effect that the conference 
 should express the hope that the measures taken by the 
 governments of the different states " to modify their monetary 
 system, in conformity with the basis laid down by the con- 
 ference, may end in diplomatic conventions." It was unani- 
 mously adopted, for it bound the states to nothing whatever, 
 and the delegates only to the expression of a hope. 
 
 There was another difference of opinion as to the time 
 to be allowed the different governments to make known their 
 decisions upon the resolutions voted for by the conference, and 
 as to the ultimate steps to be taken. In the case of the United 
 States, Ruggles said it would be necessary to submit measures 
 to Congress, which did not meet till the next December. Ger- 
 man states would need to confer with their confederates, sign- 
 ers of the treaty of 1857. The English delegates could not 
 promise a final decision for England for any fixed time. 
 Prince Napoleon submitted another innocuous proposition: 
 " As soon as answers shall be received from the different states 
 to the communication officially made to them of the labors 
 of the conference by the French government, that govern- 
 ment, in accordance with the answers that may be received, 
 will call a new conference, if necessary." It was adopted. 
 He submitted, further, that it was desirable that answers should 
 be received before the 15th of the following February, and 
 Baden, Bavaria, Denmark, Holland, Portugal, Prussia, Rus-
 
 PROGRESS OF MONETARY UNITY 83 
 
 sia, Switzerland, Turkey, and Wiirtemburg voted for it. Aus- 
 tria, Belgium, Italy, Sweden, and Norway declared for Oc- 
 tober 1st a date only three months off while the United 
 States desired May 15, and Great Britain June 1, 1868. 
 
 Nothing remained for the conference but the exchange of 
 farewell courtesies, which took place at the eighth and last 
 sitting, July 6, and which consisted mainly of a review of 
 the proceedings and decisions of the conference by Parieu, a 
 response for the foreign delegates by Baron de Hock, and an 
 expression of thanks from Prince Napoleon, promising to be 
 an interpreter for the conference with the Emperor, who, the 
 Prince said, had " taken a lively interest in its labors." 
 
 It must appear to one who studies closely the results of this 
 conference that, taken with the Latin Union agreement of two 
 years before, the cause of monetary unity had made marked 
 progress. While the discussion was largely theoretical, and 
 although some conflicts of national interests and occasional 
 jealousies manifested themselves, the apparent unanimity of 
 the nations as to the desirability of monetary union and as to 
 many important principles, the settlement of which was essen- 
 tial, was most encouraging for the advocates of such unity. 
 Though dealing with theories, these delegates were not simply 
 theorists. Many of them were men intimately connected 
 with the practical affairs of their governments ; many of them, 
 also, were the recognized authorities of the time in financial 
 affairs. The Emperor may have taken considerable pride in 
 the fact that the Erench system, or that of the Latin Union. 
 \vas adopted as the basis of the proposed reform, but the readi- 
 ness with which it was endorsed by foreign delegates is assur- 
 ance that national jealousy did not at first, any way color 
 their opinions. Accustomed as this generation has been to the 
 greatest diversity of views on monetary questions, and par- 
 ticularly as to the standard of value, it must be considered ex 
 traordinary that a body of men of the character described,
 
 84 THE CONFERENCE OF 1867 
 
 representing all the national interests, race prejudices, and 
 governmental traditions of Europe and North America, should 
 so nearly agree upon such important propositions regarding one 
 of the chief elements in national life money. The explana- 
 tion must be found largely in the spirit of the times. 
 
 The most notable act of this conference, undoubtedly 
 and, as it proved, an act of far-reaching consequences was 
 its adoption of the principle of the gold standard for all civil- 
 ized nations. It did not mark the beginning of the gold move- 
 ment, for it had its beginning much earlier, as we have seen, 
 but it marked the decisive turn in affairs, the consummation 
 of an economic movement, when nations which had maintained 
 a silver or a double standard for centuries openly announced 
 their intention to thereafter seek the gold basis. 
 
 The conviction which controlled the conference regarding 
 the standard was well stated by Parieu in his summing-up of 
 the work of the session. " Here," he said, " the laws that 
 brought precious metals into contact with the wealth of com- 
 munities, and which have twice given a monetary system to 
 the universe, came into consideration. The rule of these laws 
 was broken by the great historic catastrophe that separated 
 ancient from modern civilization by an intermediate period of 
 poverty and barbarism, but now strikingly reproduced after 
 a lapse of eighteen centuries. In the time of Augustus, when 
 gold had gained the ascendency in money circulation, the 
 Roman poet exclaimed: 
 
 " ' Aera debant olim; melius nunc omen in auro est, 
 Victaque cone-edit prisca moneta novae.' 
 
 " From the middle ages to our day, the revolution that 
 Ovid mentions incompletely, for he omits silver, has lain quiet 
 till it breaks out now with renewed strength and peculiar 
 mineralogical, industrial, and commercial circumstances. No 
 new invasion of barbarism can reverse its course in Europe, 
 where silver first took the place of iron and copper, and where
 
 MOVEMENT FOR GOLD STANDARD NATURAL AND SPONTANEOUS 85 
 
 silver is now displaced by gold. In most of the civilized na- 
 tions of Europe and America the latter metal has become the 
 principal instrument of circulation, because its portability and 
 density particularly recommend it as the material for mone- 
 tary unity. When the convention of the 23d September, 
 1865, closed, three of the associate states wished gold to be the 
 choice of the convention. Even in the last century a learned 
 man in Germany, where so many grand ideas originate, de- 
 clared that gold was destined to become the bond of the mone- 
 tary systems of the world." 
 
 "With a proper understanding of this conference, the course 
 of the succeeding events can be better appreciated, and we can 
 avoid the misapprehension or wilful misconstruction of 
 events that has been so common in recent years. The 
 movement for a gold standard whether it was a great human 
 misfortune or not did not originate with men having the 
 secret purpose of conspiring in favor of bondholders and 
 money-changers. The sentiment arose spontaneously and 
 naturally among all civilized peoples at a time when gold was 
 cheap and circulated freely, and when a reawakened industry 
 was making gigantic strides. It was given expression by men, 
 considered the wisest in their generation in monetary matters, 
 honestly thinking that the welfare of the human race depended 
 upon obedience to economic law, as inexorable as any natural 
 law. On no other ground could the chosen representatives of 
 twenty civilized states, only two of them maintaining a gold 
 standard, have voted for that standard, when silver was worth 
 more than gold, or as much, at the existing coining ratios, and 
 when the prospects were that the interests of the creditor 
 would be best subserved by the payment of obligations in sil- 
 ver. Moreover, one of the avowed purposes of monetary union, 
 to effect which this conference labored, was to free commerce 
 largely of the operations of the money-changer. 
 
 Having thus decided the question of the standard, fixed
 
 86 THE CONFERENCE OF 1867 
 
 the 5-franc piece, nine-tenths fine, as the common denomina- 
 tor, determined that international types of coinage should have 
 legal currency within the union, and proposed future diplo- 
 matic conventions to regulate details, it was not strange that 
 most of the delegates separated in the expectation that mone- 
 tary unity throughout the civilized world was soon to be real- 
 ized, even if the position of England and the German states 
 was somewhat enigmatical. ^Napoleon III. might well be 
 pardoned having bright visions of a victory of peace, carrying 
 the name of Napoleon and the coins and influence of imperial 
 France more widely into the world than all the victories at 
 arms of Napoleon the Great. 
 
 But the year 1867 with Xapoleon III. was something- 
 like the year 180Y with his renowned uncle. It marked the 
 turn in the tide of his fortune.
 
 CHAPTER III 
 
 CHANGES IN COINAGE LAWS AMD MINT REGULATIONS THE DEMONETIZA- 
 TION OF SILVER 
 
 SEPARATING thus, in the hope and belief that a uniform in- 
 ternational coinage could be practically brought about, the 
 continued agitation of the subject by the delegates in their 
 several countries, with some attempts at governmental action, 
 naturally followed. The literary campaign became livelier 
 than ever. Articles upon the question from the pens of lead- 
 ing authorities appeared in the financial and economic re- 
 views of nearly every country in Europe. In England there 
 were notable papers by W. Stanley Jevons, on the condition 
 of the metallic currency of the United Kingdom with refer- 
 ence to the question of international coinage; by Ernest Seyd, 
 on foreign exchanges, with a defence of the double standard 
 for a proposed system of universal coinage; by Walter Bage- 
 hot, giving a plan for assimilating the English and American 
 money as a step towards a universal money; and by others. 
 The French writers quickly became engaged in a controversy 
 over the question of standards. Parieu earnestly and enthu- 
 siastically defended the decision of the conference, and for a 
 time his position was supported by a majority of the ablest 
 economic and financial writers. On the other hand, Cernuschi 
 and Wolowski ably argued for the retention of the double 
 standard, and they were supported by a few of the leading 
 financiers, particularly by those connected with the Bank of 
 France. In Germany, economic opinion was almost entirely 
 for gold. Dr. Soetbeer, Xeller, Bamberger, and a score of 
 others discussed the reform of the nation's currency in all its
 
 88 THE DEMONETIZATION OP SILVER 
 
 phases; seldom has any economic topic been so thoroughly de- 
 bated, and the controversy centred largely upon the subject 
 of the standard of value, except in the United States, where 
 there was no controversy at all as to the desirability of inter- 
 national uniformity in coinage or of the standard of gold; 
 every one who considered the matter desired both. The words 
 " coin " and " gold " were practically synonymous in this coun- 
 try when paper was the currency. 
 
 France, for some little time after the conference, simply 
 used her diplomacy to encourage efforts for unity among other 
 governments, before taking definite steps to modify her own 
 system to conform to the decision of the delegates. A pre- 
 liminary treaty was arranged with Austria, not a difficult mat- 
 ter, as Baron de Hock had already prepared its terms in an- 
 ticipation of the results of the conference, and as the 4-floriri 
 piece was the exact equivalent of the 10-franc piece of the 
 Latin Union. Austria was also anxious to resume specie pay- 
 ments, and was politically inclined to ally herself to France, 
 since the Germans had drawn towards Prussia, where Bis- 
 marck's vigorous policy was rapidly forming a new empire 
 in a manner somewhat disagreeable to Napoleon. Spain came 
 into the Latin Union in 1868 as a result of diplomatic over- 
 tures. 
 
 The French government soon became aware that not the 
 least difficult part of its programme would be to obtain a legis- 
 lative endorsement of the gold standard. "With the prestige 
 of the conference, the government thought French opinion 
 would be modified, but a commission, appointed in 1867, de- 
 clared against the adoption of the gold standard. In view of 
 the developing opposition to a change in the system, the gov- 
 ernment called into being a larger and more imposing commis- 
 sion, the majority of whom were known to be in favor of gold. 
 It went through the forms of an inquiry. Advocates of the 
 gold standard strongly pleaded its cause, restating the various
 
 FRENCH FINANCIERS OPPOSE MONOMETALLISM 89 
 
 arguments in its favor the plentifulness of gold, the general 
 sentiment for its adoption as a common standard, the danger 
 to France unless the government acted quickly and avoided 
 the difficulties of entering the procession late, and the fact that 
 the states of the North German Union had practically deter- 
 mined to adopt the standard. The idea was also advanced 
 that, both metals having depreciated, one of them should be 
 demonetized so as to assure the value of the standard. But the 
 Bank of France strongly opposed the proposal. Rouland, the 
 Governor of the bank, said to the commission : " We have not 
 to do with ideal theories. The two moneys have actually ex- 
 isted since the origin of human society. They co-exist because 
 the two together are necessary by their quantity to meet the 
 needs of circulation. This necessity of the two metals, has it 
 ceased to exist? Is it established that the quantity of actual 
 and prospective gold is such that we can now renounce the use 
 of silver without disaster?" Baron Rothschild, one of the re- 
 gents, was equally strong in opposition, and held that suppres- 
 sion of silver would amount to a veritable destruction of values 
 without any compensation, for the alleged inconveniences of a 
 lack of uniformity in coins he considered a trifling matter. 
 But Napoleon was determined, and his commission declared 
 by a vote of 17 to 6 for gold. This was in the summer of 
 1869. 
 
 Overtures were made to Germany, but Bismarck, as coolly 
 as before, requested his minister at Paris to say that the politi- 
 cal programme arranged in Germany embraced also the sub- 
 ject of coinage, and it would be necessary to await the devel- 
 opments of the programme before considering negotiations 
 with other powers. But while the Chancellor was keeping his 
 counsels to himself, the commercial organizations all over Ger- 
 many were continuing an agitation for the Paris programme. 
 At the organization of the Handelstag, a convention of Cham- 
 bers of Commerce in the different, cities, as early as 1861, the
 
 90 THE DEMONETIZATION OF SILVER 
 
 German governments had earnestly recommended the adop- 
 tion of measures to secure monetary unity, and it was repeated 
 in 1865, while the organization was kept up by a permanent 
 committee of fifteen, of which Dr. Soetbeer was chairman. 
 This committee had from the first advocated the establishment 
 of the gold standard as a primary step for the desired unity, 
 and, at the fourth convention at Berlin in October, 1868, Dr. 
 Soetbeer introduced resolutions declaring that " monetary 
 unity, and at the same time such a general reform as befits 
 the age, can be brought about by the adoption at the same time 
 by all the German states of the single gold standard with the 
 full application of the decimal system, in pursuance of the 
 principles recommended by the International Monetary Con- 
 ference of Paris in its report of the 6th of July, 1867." Spe- 
 cial attention was called to a proposition to introduce a unit of 
 value and of account equivalent to the gold 5-franc piece with 
 its decimal multiples and its division into 100 shillings ; or 
 to adopt for the unit the gulden as the tenth part of a principal 
 gold coin identical with the 2 5-franc piece, and divided into 
 100 kreuzers. The scheme of unifying the coinage of the peo- 
 ple by a reckoning by marks as the third of a thaler was dis- 
 tinctly discarded as unscientific, even if better adapted to the 
 habits of the people; yet this was the scheme which Bismarck, 
 as a practical politician, was inclined to favor, and which was 
 eventually adopted with some modifications. At this conven- 
 tion in 1868, the Handelstag petitioned the North German 
 Union and the governments of Bavaria, Wiirtemberg, Baden, 
 and Hesse to take appropriate steps without delay for transi- 
 tion to the gold standard, so that, if possible, it might go into 
 effect by January 1, 1872, at the latest. Had not political 
 conditions changed, it seems entirely probable that Germany 
 would have adopted the plan of the conference. Its steps were 
 all in that direction. Even late in 1860, Walter Bagehot, 
 writing of the Xorth German Union, said : " Germany has a
 
 GERMANY AND THE PARIS PLAN 91 
 
 currency to choose; none of her many currencies which have 
 descended from her divided states are fit to be her exclusive 
 currency now that she is one. If things remain as now, she is 
 sure to adopt the French currency ; already there is a proposal 
 in the Federal Parliament that she should take it." l In June, 
 1870, or a month before the Spanish throne afforded a pretext 
 for hostilities, Prussia appointed a commission to inquire into 
 the best means of adopting a gold standard for the allied states. 
 
 While the British delegates had shown little zeal for a gen- 
 eral monetary reform at the conference, the commercial opin- 
 ion of England was far from indifferent. The predominating 
 desire had been to secure the pound sterling as a unit, but upon 
 the report of the delegates to Lord Stanley, and of Professor 
 Leone Levi, concerning the measures advocated by the inter- 
 national committee, the agitation in favor of the reduction of 
 the value of the pound to that of a 25-franc piece grew, and a 
 parliamentary commission was raised to inquire into the sub- 
 ject and report upon the feasibility of the project. 
 
 The situation in the United States was unique, and should 
 be carefully examined. The action of the Paris conference ex- 
 cited little interest among a people who were preparing for 
 themselves a fresh disaster by an overindulgence in paper in- 
 flation, and were absorbed in grave questions over the recon- 
 struction of a recently rebellious section, while the party in 
 power was engaged in a struggle with a President which nearly 
 ended in his impeachment. The subject of monetary union 
 was kept alive only by diplomatic steps which for more than 
 a year failed to attract the notice of Congress. Delegate Rug- 
 gles maintained his interest and enthusiasm, bringing the mat- 
 ter to the attention of the State Department regularly. In a 
 
 i " Universal Money." Some bimetallic writers have made the 
 mistake of citing this as evidence that Germany proposed to adopt 
 the double standard. The proposal was to adopt the French sys- 
 tem as modified by the conference of 1867 a gold standard.
 
 92 THE DEMONETIZATION OF SILVER 
 
 communication to Secretary Seward shortly after the adjourn- 
 ment of the conference he spoke of the unanimity, not only in 
 the conference, but in the international committee, which, he 
 said, acted independently, for the general abolition of the 
 double standard. In reply to a note from Minister Berthemy 
 in September, notifying this government that France was seek- 
 ing to carry out the plans of the conference and would be 
 pleased to receive a reply from the United States, Secretary 
 Seward replied that the matter was already being examined 
 by the Secretary of the Treasury and would receive prompt at- 
 tention. A few days later McCulloch wrote to Seward that 
 the idea of the conference had his approval and concurrence 
 and that he would present the question to Congress in Ko- 
 vember. It would have been futile to have asked that body 
 to take the matter up in 1867, when it was assembling repeat- 
 edly, only with a view of checking the President and defeating 
 his plans, and it was not till November that Ruggles finally 
 submitted his formal report. 
 
 He spoke of the composition and character of the confer- 
 ence, whose delegates represented a population of 320,000,000 
 souls, and of the importance of embracing in a monetary union, 
 so much desired, the South American states. The cost of re- 
 coinage required by the proposed unification, he maintained, 
 would be more than met by the saving to commerce in the 
 charges of money-changers. There were, he said, scattered 
 through the different nations of Europe and along their fron- 
 tiers at least 5000 money-changers and their employes, gain- 
 ing a living by changing the coins of the various countries of 
 the world. Even supposing that there were but 2000 of them, 
 and that they earned each only $1000 a year, it would amount 
 to $2,000,000, which commerce would save, and which would 
 go far towards the payment of all the necessary recoinage. 
 In speaking of the plans for unification he referred to the mat- 
 ter of the standard of value in this way :
 
 A BILL FOR UNIFICATION IN CONGRESS 93 
 
 " The establishment of the single standard exclusively of gold 
 Is, In truth, the cardinal, if not the "all-important, feature of the 
 plan proposed by the conference, relieving the whole subject, by 
 u single stroke of the pen, from the perplexity and, indeed, the im- 
 possibility of permanently unifying the multiplicity of silver coins 
 scattered through the various nations of Europe. It is a matter 
 of world-wide congratulation that on this vital point the delegates 
 from the nineteen nations represented in the conference were unani- 
 mous, not excepting France itself, so strongly wedded by its na- 
 tional tradition to the double standard." 
 
 He fully explained the reasons that had actuated the dele- 
 gates in considering the system of the Latin Union the best as 
 a basis for unification, and why the majority had preferred the 
 gold 5-franc piece as a common denominator, which would 
 not only make the dollars of the United States, when reduced 
 by a new coinage, convertible into 5-franc pieces, but France 
 had agreed at his " earnest solicitation," to coin a 2 5-franc piece 
 to correspond with our half-eagle, and, he hoped, with a modi- 
 fied sovereign. The report was fully analyzed by the Secretary 
 of the Treasury, McCulloch, in his report at the assembling 
 of Congress, and attracted enough attention to be asked for by 
 the Senate and printed as one of its documents, so that that 
 body was abundantly aware of what was going on in reference 
 to the standard value. The logic of events leads naturally 
 and directly up to the Act of 1873, acquiesced in, neither in 
 ignorance nor through " hypnotism," by nearly everybody in 
 Congress and out. 
 
 On January 6, 1868, or a few days after the Ruggles re- 
 port was submitted to the Senate, Senator Sherman introduced 
 a bill (No. 217) to carry out the proposed plan of unification 
 so far as it could be done by the United States. l It chiefly 
 
 i The bill in full was as follows: 
 
 " Be it enacted by ihe Senate and House of Representatives of the United States 
 of America in Congress assembled: 
 
 " That, with a view to promote a uniform currency among the na- 
 tions, the weight of the gold coin of $5 shall be one hundred and 
 twenty-four and nine-twentieths troy grains, so that it shall agree 
 with a French coin of 25 francs, and with the rate of thirty-one hun- 
 dred francs to the kilogramme; and the other sizes or denominations
 
 94 THE DEMONETIZATION OP SILVER 
 
 provided for the reduction of the gold coins to conform to 
 French gold coins, and also for reducing the weight of the 
 fractional silver coins to the French valuation, while discon- 
 
 sliall be in due proportion of weight, and the fineness shall be nine- 
 teuths or i)00 parts fine in 1000. 
 
 " Sec. 2. And be it further enacted, That in order to conform the 
 silver coinage to this rate and to the French valuation, the weight of 
 the half-dollar shall be 179 grains, equivalent to 110 decigrammes; 
 and the lesser coins be in due proportion, and the fineness shall be 
 nine-tenths. But the coinage of silver pieces of one dollar, five 
 cents, and three cents shall be discontinued. 
 
 " Sec. 3. And be it further enacted, That the gold coins to be is- 
 sued under this act shall be a legal tender in all payments to any 
 amount; and the silver coins shall be a legal tender to an amount 
 not exceeding ten dollars in any one payment. 
 
 " Sec. 4. And be it further enacted, That in the assay of the gold 
 coins to be issued under this act there shall be no greater deviation 
 allowed from the standard of fineness than one-thousandth part 
 above or below. 
 
 " Sec. 5. And be it further enacted, That the devices on the coins 
 shall consist of such emblems and inscriptions as are proper to the 
 republic of the United States, but plainly distinct from those now 
 in use; each coin shall express its proper date and value; and the 
 value of the gold coins shall be stated both in dollars and in francs; 
 and whenever it is ascertained that Great Britain has conformed 
 the pound sterling to the value of the piece of $5, then the value in 
 British terms shall also be stated; and the devices as well as the 
 diameters of the coins shall be fixed by the Director of the Mint, 
 under the control of the Secretary of the Treasury. 
 
 " Sec. G. And be it further enacted, That foreign gold coins, con- 
 formed to the basis herein prescribed, shall be a legal tender in all 
 payments whatsoever, so long as the standards of weights and fine- 
 ness are duly maintained; and it shall be the duty of the commis- 
 sioners of assay, meeting at the mint in the month of February of 
 each year, to try a sufficient number of such foreign coins of the pre- 
 ceding year, to be procured for that purpose by the Director of the 
 Mint, and if any serious deficiency be found, the Secretary of the 
 Treasury shall have power to suspend the right of legal tender in 
 the particular case. 
 
 " Sec. 7. And be it further enacted, That when the gold and silver 
 coins of the United States are brought to the mint or its branches 
 for recoinage, such coins shall be received by weight, and those 
 of them which have been issued as nine-tenths fine shall be so re- 
 ceived, but all others by assay. And in payments at the mint for 
 both gold and silver coins above specified, the value shall be ren- 
 dered according to the weights prescribed in the first and second 
 sections of this act, and there shall be no charge for coinage, seign- 
 iorage, or internal revenue; and on all other deposits of gold for coin- 
 age tlie charge shall be one-half of 1 per cent. 
 
 "Sec. 8. And be it further enacted. That for the uses of the 
 Treasury and the custom-houses, the Secretary of the Treasury shall, 
 as soon as this act takes effect, publicly declare the rates at which
 
 "THE OHIO IDEA" 95 
 
 tinning the coinage of the silver dollar. Thus the right to 
 coin the dollar under the law was admitted, but its abandon- 
 ment was proposed without any disguise. There was no secret 
 about it, and no excuse was considered necessary. It was one 
 of the best-advertised features of this whole scientific move- 
 ment. The other sections of the measure were designed ob- 
 viously for no other purpose than to accomplish the unification 
 as quickly and as easily as possible. Meantime President 
 Dumas, of the French commission on coins, had sent to Presi- 
 dent Johnson a specimen of the new 25-franc piece which it 
 was proposed to have the mints issue, and gave other assur- 
 ances that the Emperor was intending to have France do its 
 part in furthering the common object. 
 
 It was about this time that an idea further complicating 
 affairs in this country seized on large masses of voters, es- 
 pecially in the Western States; and leaving for a while Senator 
 Sherman's bill to the Finance Committee, to which it was re- 
 ferred, and of which he was chairman, it will be well to con- 
 sider briefly this idea, which was for the practical repudiation 
 of the public debt, amounting then to about $2,500,000,000. 
 While the subject may not pertain directly to the development 
 of international action, it has a bearing on it, our bonds being 
 
 the coins of the United States and of foreign countries now cur- 
 rent shall be reckoned upon estimates furnished by the Director 
 of the Mint. 
 
 " Sec. 9. And be it further enacted. That this act shall take effect 
 on the 1st day of January. 1800, but to expedite the recoinage it 
 shall be lawful for the mint and its branches to receive gold and 
 silver coins of the United States for that purpose on and after the 
 1st day of October next, and to give certificates therefor, payable 
 in the order of receipt in the new coins, and to convert the metals 
 thus received into ingots and planchets to be ready for stamping 1 
 when this act takes effect. And in respect to other deposits of gold 
 or purchases of silver, the like certificates may be issued if de- 
 manded, on and after the first day of October next. 
 
 " Sec. 10. And ftp it further enacted. That the weights to be used 
 at the mint, when this act goes into operation, may be either troy 
 weights or French gramme weights, or both, as the Secretary of the 
 Treasury shall direct."
 
 96 THE DEMONETIZATION OF SILVER 
 
 so extensively held abroad, and as showing the temper of Con- 
 gress on financial topics at this very important period. The 
 burden of the debt, of course, seemed heavy, and it created a 
 choice opportunity for demagogues. Few openly advocated 
 repudiation, but it was generally brought forward in the shape 
 of the payment of the u five-twenties " by greenbacks, which 
 were then not redeemable in gold and were greatly depre- 
 ciated. Some advocated the taxation of the bonds. The 
 Democrats espoused these plans under the leadership of Pen- 
 dleton, and even Republicans in the West were carried away 
 by what was known as '" the Ohio idea." Such men as Henry 
 C. Carey, William D. Kelley, and Thaddeus Stevens, of Penn- 
 sylvania, opposed any contraction of the currency as a step 
 towards resumption, the last words of Stevens, in the House, 
 a month before his death, being for the payment of the " five- 
 twenties " in paper money. Even Senator Sherman made a 
 speech on February 27, 1868, in which he maintained the legal 
 right of the government to redeem the principal of the debt 
 in paper, though denying the right to make a new issue for 
 the purpose and questioning the wisdom of such a financial 
 policy, and, in view of his position, it created much anx- 
 iety abroad, where it was naturally difficult to reconcile such a 
 principle with the professed desire of the United States 
 to resume specie payment and to establish a uniform money 
 on a gold standard. It was at about this time that Congress 
 suspended the authority of the Secretary to retire treasury 
 notes. But the strong defenders of the national credit in both 
 branches of Congress quickly brought the Republican party, 
 or the majority of it, to a realizing sense of the impossibility of 
 resumption under such theories, and finally secured the Act of 
 1869, pledging the United States, in all cases where the word- 
 ing of the contract admitted of doubt, to payment in coin or 
 its equivalent, of all public obligations, and also declaring 
 that treasurv notes should be redeemed in specie before the
 
 SHERMAN URGES UNIFICATION MEASURE 97 
 
 payment of any part of interest-bearing obligations not due at 
 the date of the act. It was entitled " An Act to Strengthen the 
 Public Credit," and it unquestionably had that needed effect. 
 
 "While this conflict was in progress, June 9, 18 G8, Senator 
 Sherman reported favorably from his committee the bill " to 
 promote a uniform currency among the nations," advocating 
 its passage in a strongly written report. In it he said that the 
 same reasons for adopting an international standard of value 
 " now exist as induced the American colonies less than one hun- 
 dred years ago to abandon their diversified standards of value 
 and adopt as a common unit the American dollar. Every ad- 
 vance towards a free exchange of commodities is an advance in 
 civilization. Every obstruction to a free exchange is born of 
 the narrow, despotic spirit which planted castles upon the 
 Rhine to plunder peaceful commerce. Every obstruction to 
 commerce is a tax upon consumption; every facility to a free 
 exchange cheapens commodities, increases trade and produc- 
 tion, and promotes civilization. Nothing is worse than sec- 
 tionalism within a nation and nothing is better for the peace 
 of nations than unrestricted freedom of intercourse and com- 
 merce with each other." In this language, used as a general 
 reason for international uniformity of coins, we get a glimpse 
 of the prevailing sentiment for a wider family of nations 
 internationality \vas a sort of scientific, economic, almost a 
 political fad. 
 
 One reason the senator gave why such a union would be 
 profitable to this country was that it was gold-producing, and 
 another was that, being a new nation, we were, therefore, a 
 debtor nation, and by placing ourselves in harmony with the 
 monetary units of creditor nations, the easy borrowing of 
 money for resumption purposes was promoted ; besides, it per- 
 mitted the payment of debts without the loss from recoinage 
 or of exchange, always paid by the debtor. The committee 
 also regarded the plan proposed by the Paris conference as the 
 7
 
 98 THE DEMONETIZATION OF SILVER 
 
 best to accomplish the desired end. " The single standard of 
 gold," he said, " is an American idea, yielded reluctantly by 
 .France and other countries where silver is the chief standard 
 of value. The impossible attempt to maintain two standards of 
 value has given rise to nearly all the debasement of coinage 
 of the last two centuries. The relative market value of silver 
 and gold varied like other commodities, and this led first to 
 the demonetization of the more valuable metal, and second 
 to the debasement or diminution of the quantity of that metal 
 in a given coin." The committee, he said, recommended 
 the 5-franc unit because it was the smallest gold coin in use, 
 and, therefore, the most convenient unit ; it approximated more 
 nearly to the existing coinage of the great commercial nations 
 that any other, the franc being already in use by 70,000,000 
 people in Europe, and easily adapted to the existing coin- 
 ages of other nations. The Secretary of the Treasury and 
 the Director of the Mint had been consulted concerning the 
 bill, the report added, and there were positive assurances that 
 other nations would adopt the system. " A strong party in 
 Great Britain, including many of her ablest statesmen and 
 the great body of her commercial classes, has urged the adop- 
 tion of the plan even in advance of the United States." South 
 American states had also expressed a purpose to adopt it. 
 
 The zeal of the committee in appropriating the gold stand- 
 ard as an American idea, and of claiming that it had been 
 yielded reluctantly by France and other nations, is difficult to 
 understand except on the theory that it was a popular thing in 
 this country then to claim as much as possible of responsibility 
 for that policy. It was convenient for France to have some- 
 thing to yield, if only for effect, but she was required to make 
 very little use of this ammunition, for, as already observed, the 
 other nations were quite as ready to adopt the French unit as 
 they were to adopt the gold standard. This statement in the 
 committee's report was used by the silver advocates years later
 
 NEW YORK PLEADS FOR SILVER 99 
 
 in an effort to substantiate the absurd claim that silver was 
 demonetized by the stealthy acts of men in this countryj used 
 by those who were, in the sixties, quite as pronounced in their 
 eulogies of the gold standard as any one. 
 
 The objections to the discontinuance of the coinage of the 
 silver dollar did not come from the mining states in those days, 
 but from commercial centres like New York city. The 
 minority report on the bill was written by Senator E. D. Mor- 
 gan, of New York, who for years was at the head of one of the 
 large commercial houses of that city. But he did not base 
 his objections on the ground that it was better to have a 
 double standard. He said: " The reduction which this measure 
 would effect in the present legal standard value of the gold 
 coin of the United States would be at the rate of $3.50 in the 
 hundred^ and the reduction in the legal value of our silver 
 coinage would be still more considerable. A change in our 
 national coinage so grave as that proposed by the bill should 
 
 be made only after the most mature deliberation 
 
 The United States has a peculiar interest in such a question. 
 It is a principal producer of the precious metals, and its geo- 
 graphical position, most favorable in view of impending com- 
 mercial changes, renders it wise that we should be in no haste to 
 fetter ourselves by any new international regulation based on 
 an order of things belonging essentially to the past." 
 
 After speaking of the silver mines of Nevada and our 
 proximity to the silver-producing people of Mexico, he con- 
 tinued : 
 
 " The Pacific Railway will open to us the trade of China, Japan, 
 India, and other Oriental countries of whose prepossessions we must 
 not lose sight. For years silver, for reasons not fully understood, 
 has been the object of unusual demand among these Asiatic na- 
 tions, and now forms the almost universal medium of circulation, 
 absorbing rapidly the silver of coinage. The erroneous proportion 
 fixed between silver and gold by France, and which we are asked 
 to copy, is denuding that country of the former metal. Our own 
 monetary system, thoiigh less faulty, is not suitably adjusted in 
 this respect. The silver dollar, for instance, a favorite coin of the
 
 100 THE DEMONETIZATION OP SILVER 
 
 native Indian and distant Asiatic, has wellnigh disappeared from 
 domestic circulation, to reappear among the Eastern peoples with 
 whom we, more than ever, seek close intimacy. As they prefer this 
 piece, we do well to increase, rather than discontinue, its coinage." 
 
 Nothing was said by Senator Morgan against making gold 
 the exclusive standard of value. He considered a silver dollar 
 for commerce with the East desirable, and here we have the 
 first plain suggestion of the trade dollar, which became a feat- 
 ure of the law of 1873. He argued, further, that the reduction 
 of the value of gold coins was a movement in the wrong direc- 
 tion, as, owing to the increased abundance of gold and its con- 
 sequent decrease in value, the standard of coins should be 
 raised instead of lowered, and cited the opinion of Chevalier 
 regarding the possible necessity of demonetizing the yellow 
 metal. These two reports, taken in connection with other evi- 
 dences, show how unsettled in its view was the monetary world, 
 following a long period of remarkable gold production, but 
 Senator Morgan's opinion was shared by very few people any- 
 where at that time. 
 
 The bill was not called up for action, the Senate as well 
 as the country being absorbed in other matters, one of which 
 was a presidential election. In July Congress adjourned to 
 meet September 21, but before its adjournment William 
 D. Kelley, of the Committee on Ways and Means, introduced a 
 bill for international coinage, proceeding from the view, unani- 
 mously rejected at the Paris conference, that an entirely new 
 monetary system should be adopted, conforming closely to the 
 metric system. The bill provided for a coin of the nominal 
 value of one dollar, but weighing If grammes, with a fine- 
 ness of .900, or containing about 1^ grammes of fine gold; it 
 also provided that the coin should be rated as legal currency in 
 the United States from January 1, 1869, and that the ratio of 
 exchange should be $1000 of the old coins for $1003 of the 
 new. As will be observed, this change of value was slight, sim- 
 ply bringing the weights nearer an even metrical number, with
 
 FRANCE AND ENGLAND 101 
 
 less decimal figures, but leaving the coins as far away from 
 those of any other system as they were before. 
 
 Congress reassembled on September 21, and the same day 
 adjourned to October 16; met that day, and at once adjourned 
 to November 10, when, on reassembling, the second session at 
 once adjourned. The third session met in December, and did 
 little except to keep a watch on President Johnson till March 4, 
 when the Forty-first Congress and President Grant came in. 
 Under such circumstances, of course, there was little thought 
 of international coinage, and as the new Congress adjourned 
 in a month to December, nothing could be done in the way of 
 legislation in 1869. 
 
 Xow let us glance again at the course of events in Europe 
 while the Congress of the United States was thus occupied. 
 The English parliamentary commission, the appointment of 
 which has been mentioned, and of which Rivers Wilson, a del- 
 egate to the Paris conference, was secretary, made an exhaust- 
 ive report of the coinage of different countries, and reviewed 
 the plans which had been proposed to unify them without sug- 
 gesting any definite course for Great Britain, except by so 
 regulating the mint charge as to make the sovereign the equiva- 
 lent of the proposed French 25-franc piece. It gave opinions 
 of many economists favoring seigniorage. Shortly afterwards 
 the French government wrote to the English Chancellor of the 
 Exchequer, Right Honorable R. Lowe, asking what steps his 
 government would take for unification. He replied that 
 until he knew the feeling of the House of Commons he could 
 give no exact opinion. All he could say in advance of that 
 was that it would be impossible to hold out any hopes of as- 
 similation till France made up her mind to have only the gold 
 standard, her double standard being an alternating standard 
 only, and if her silver should drive out her gold it would leave 
 England nothing with which to compare her international 
 coins. He thought also that it would be impossible to have
 
 102 THE DEMONETIZATION OF SILVER 
 
 an international coinage unless the seigniorage charged on it 
 were identical in both countries, for people would take their 
 gold where they could have it coined the cheapest. In reply to 
 this France, in July, 1869, sent the report of the Imperial 
 Commission, showing that France was ready to abandon the 
 double standard, but making no promises as to seigniorage. 
 
 In bringing the subject to the attention of Parliament, in 
 August, 1869, the Chancellor said he believed it possible for 
 England and France, if they could make up their minds to give 
 up a little of their prejudice for the sake of having an inter- 
 changeable coinage, to arrive at that object. If Great Britain 
 would impose a seigniorage of about 1 per cent,, the sovereign 
 would be identical in value with the 25-franc piece. " But," 
 he said, " in order that that might be done, France would have 
 to make a sacrifice on her part. I believe the mintage she 
 charges is between a fifth and a quarter per cent. If she could 
 be prevailed upon to make it 1 per cent., we would have 
 solved the problem so far as England and France are concerned 
 of an international coinage. The operation would be per- 
 formed by modifications of the same principle. France would, 
 as now, take the payment in money; England would deduct 
 from her coin, and thus equality would be obtained." He fur- 
 ther said that, in his opinion, the Spanish doubloon, the Russian 
 frederick, and the half-eagle of America, already nearly ap- 
 proaching each other in value, could be brought to the value of 
 the proposed sovereign and the 25-franc piece, and that it would 
 be a great step in civilization. Three months later the associa- 
 tion of Chambers of Commerce, in session at Birmingham, 
 decided unanimously to present a report in favor of the inter- 
 nationalization of coinage on the Paris idea, one of the reasons 
 advanced being that other nations were upon the point of form- 
 ing a powerful monetary union, and England could not afford 
 to keep out of it; but by going into it, possessing the most 
 important general trade, she would be the largest gainer.
 
 BIMETALLISM SUGGESTED IN HOLLAND 103 
 
 Meanwhile the German states were solidifying under the 
 leadership of Prussia more rapidly than any one outside of 
 Germany appreciated, and the demand for monetary reform 
 became stronger daily. The Customs Parliament which as- 
 sembled in Berlin late in 18G8, and which was the first repre- 
 sentative body of the entire nation that had yet met, though 
 convoked to discuss cotton and tobacco, seemed to have for its 
 real object the paving of the way for the " consummation of 
 the national destinies." Money was fully discussed, and the 
 gold standard advocated. 
 
 The first sales of silver, with the gold standard in view, 
 were made in Norway. In consequence of the action of the 
 conference of 1867, the Bank of Norway was authorized by a 
 law passed in June, 1869, to change its reserve into gold, and 
 it at once began to dispose of its white metal. Sweden had 
 formed a monetary commission which was almost unanimous 
 for gold, and which eventually brought about the Scandinavian 
 Union. Holland did little. Delegate Mees strongly opposed 
 the idea of a universal gold standard, and to him belongs the 
 honor, from a bimetallic point of view, otherwise the discredit, 
 of first suggesting international bimetallism. In the confer- 
 ence he had confessed to being a partisan of a single stand- 
 ard for each particular state, while against the same standard 
 for all states. In 1869, while combating the double standard 
 as it had been practised up to that time, within a limited terri- 
 tory, he advocated as superior to any other system a universal 
 double standard, claiming that the moment it was universal- 
 ly accepted the two metals must everywhere conform to the 
 common legal ratio. But he confessed that it did not seem 
 possible of accomplishment. 
 
 Thus were affairs progressing when Napoleon III. be- 
 came involved in serious trouble. His impressionable people 
 contrasted the failure of imperialism in Mexico, and the 
 forced withdrawal of the troops, with the recent successes of
 
 104 THE DEMONETIZATION OP SILVER 
 
 Prussian arms, and the facility with which the smaller states 
 were uniting under Prussia. Bismarck's efforts to form alli- 
 ances with the south German states were an aggravation to the 
 French, who began to waver in their support of the pacific pol- 
 icy of Napoleon. He realized that something must be done, 
 but was reluctant to go to war when apparently so near the 
 realization of his economic dream. He proclaimed changes in 
 the constitution, and later secured the plebiscite of the spring 
 of 1870, by which the people were called upon to renew their 
 expressions of confidence in the Napoleonic rule. They did 
 so by a large majority, but still clamored for war with Bis- 
 marck, who was doing all he could to drive the French people 
 to a frenzy. So a pretext had to be found, the war came, Na- 
 poleon ingloriously fell, and after Sedan few hopes of inter- 
 national coinage were left. The subject was first obscured 
 and then forgotten, but that " cardinal principle," as Kuggles 
 expressed it the gold standard continued to be the goal 
 of nations, while the French system as a basis dropped out of 
 sight and out of mind. 
 
 Enough has been given of the history of monetary events 
 up to this time to show the mistake of assuming that the result 
 of the Franco-Prussian war changed the purpose of the Ger- 
 man states regarding the standard of their currency. Both 
 France and Germany had fully intended to adopt gold; Ger- 
 many did so, and the only reason France did not was that she 
 was left by the war in a political condition which allowed her 
 no opportunity to consider the subject till it was too late, so late 
 that her monetary condition made it inadvisable, if not impos- 
 sible. Long before Napoleon sent his challenge to Bismarck, 
 or before the candidacy of Prince Leopold of Hohenzollern- 
 Sigmaringen for the Spanish throne was announced, the states 
 of the Latin Union, knowing that the German states expected 
 to adopt the gold standard as soon as possible, began to con- 
 sider the advisability of adopting it first. Napoleon, hoping
 
 LATIN UNION URGED TO ACT QUICKLY 105 
 
 to restrain the warlike feelings of his impetuous people until 
 his monetary scheme could be accomplished with other na- 
 tions, probably thought France could act in advance of Ger- 
 many, even if the states became united, for their money was 
 on a silver standard and complicated, while France had only to 
 go through the formal operation of dropping silver as a meas- 
 ure of value, her currency being already almost entirely gold. 
 So from the date of the adjournment of the conference up to 
 within a few weeks of the outbreak of the war he sought to 
 carry out the policy of unification in confidence that France 
 could quickly adopt the necessary measures when the right 
 moment arrived. If he could wait till he secured the adhesion 
 of England or the United States, the bimetallists would be 
 more easily silenced. 
 
 Even in 1870, when war seemed inevitable, France was not 
 disposed to heed the clamor that some of the other representa- 
 tives of the Latin Union were making for the immediate adop- 
 tion of the gold standard. About two months before the 
 declaration of war, Feer-Herzog, the eminent Swiss repre- 
 sentative at the conference of three years before, in address- 
 ing the French monetary commission, said: " There are two 
 milliards of silver in Germany and Austria demanding that 
 they be converted into gold, because the states which possess 
 them are resolved to adopt the gold standard. The state which 
 demonetizes first will do so with but little loss, while the state 
 which shall have hesitated and waited will undergo the losses 
 resulting from the demonetizations which have preceded its 
 own, and so will pay for all the rest. The German authors," 
 he added, " have perfectly understood and explained the ad- 
 vantages which will accrue to their country from acting speed- 
 ily, while the states of the Latin Union still hold to the double 
 standard." 
 
 But, if we accept the theory of Ernest Seyd, the French 
 commission was guided by different motives. He said in ex-
 
 106 THE DEMONETIZATION OF SILVER 
 
 planation of the action of the commission in adopting the gold 
 standard that the influence in the minds of the majority of 
 the members " was entirely political, and was developed \)j 
 the probability of a war with Germany. It soon became evi- 
 dent that the members of the Imperial Commission had a 
 political design, that they had in view the forging of another 
 weapon against Germany. For there cannot be the slightest 
 doubt that, if the Emperor had beaten Germany and exacted 
 a war indemnity, he would have used the war indemnity for 
 the purpose of paying for the adoption of the gold valuation 
 and weakened Germany further by the demonetization of sil- 
 ver." Seyd says that from personal conversation with the 
 members of the commission and from observation, he can 
 vouch for the fact that this design upon Germany was under- 
 lying the inquiry as one of the chief though not avowed mo- 
 tives. 
 
 Seyd was an ardent advocate of the double standard, and 
 his knowledge of the events of the few years previous seems to 
 have deserted him at this point. In the first place, the French 
 commission had adopted the gold standard long before the 
 probability of a war with Germany could have supplied the mo- 
 tive, and had so informed the British government. In the next 
 place, France was very differently situated, so far as the 
 adoption of that standard was concerned, from Germany. 
 Seyd himself gave as his estimate of the stock of coin in 
 the states of Germany before 1871, about $150,000,000 of 
 gold and $380,000,000 of silver. On the other hand, France 
 had a stock of gold, according to the estimates of the best 
 French authorities at that time, amounting to $700,000,000, 
 and of silver amounting to only $300,000,000. Indeed, 
 France had but a few years before taken steps to keep sil- 
 ver in circulation; her total coinage of 5-franc pieces from 
 1860 to 1870 had not amounted to more than 150,000,000 
 francs (say $32,000,000), and they circulated little till 1867.
 
 PAYMENT OF FRENCH INDEMNITY 107 
 
 Now, with the knowledge that both countries intended to 
 adopt the gold standard, and assuming that France had been 
 victorious, it is clear that a lot of German silver could not 
 have helped her to adopt the gold standard, except incidentally 
 in the reduction of her public debt, and any indemnity she 
 could have exacted from Germany would have no more than 
 sufficed to have paid the ordinary expenses of the war. But 
 to go to a gold standard Germany, unlike France, needed to 
 buy gold and sell silver, unless she could take the gold in the 
 shape of an indemnity. It is commonly supposed that this 
 was exactly what she did. There has been a great deal of loose 
 talk on this topic, the assumption being that the 5,800,000,000 
 francs France paid over to the conqueror in about two year? 
 was in the yellow metal, and that Germany at once used it to 
 institute the gold standard. As a matter of fact, in the settle- 
 ment of the indemnity and interest, France paid Germany but 
 comparatively little specie, about one-tenth of the whole, and 
 almost one-half of that tenth was in silver. 1 Germany made 
 no net gain in gold till she began to sell silver in 1873, when 
 all but a slight remainder of the indemnity had been paid. The 
 French payment was largely a transaction in credits. There 
 exists in Europe a system of international payments of which 
 very little seems to be known in this country. If a Paris 
 merchant wishes to make a payment in Berlin, he usually 
 sends some kind of securities having international value to 
 
 i Leroy-Beaulieu, " Traite de la Science des Finances." 
 " The fine was paid, either in actual specie or in bills of exchange 
 on London and other specie-paying points. France borrowed noth- 
 ing abroad wherewith to make the payment, and at the end of this 
 vast operation is found to be possessed of as much gold and silver 
 as when the operation began, while Germany has permanently 
 gained no gold and silver by it." Report of the Silver Commission 
 of 1876. 
 
 In the years 1871--3 the net loss of gold in France was about $70,- 
 000.000. while her exports of silver were about $50,000.000 greater 
 in those three years than in the three years previous to 1871. These 
 figures coincide very nearly with the amount of gold and silver act- 
 ually paid Germany.
 
 108 THE DEMONETIZATION OF SILVER 
 
 his Berlin agent, where they are sold for the benefit of his 
 creditor. At the close of the war France had a vast amount of 
 foreign credits. This foreign paper was sent abroad to secure 
 funds for the purchase of the new rentes, the transaction, 
 therefore, amounting to a drawing by France upon her foreign 
 debtors in favor of Germany. 1 Of course, it was at first a hard 
 blow to France, for it deprived her of a vast amount of the 
 wealth she had accumulated through her commerce and the 
 investments of her domestic industry, but it did not exhaust 
 her specie, and in one year, 1874, she made a net gain of gold 
 larger than her net loss during the three years 1871--3. 
 
 However much, therefore, Bismarck relied on the indem- 
 nity as a means to cripple France, Germany did not adopt the 
 gold standard because it was obtained. Victory hastened the 
 operation which Germany had long contemplated, largely be- 
 cause it hastened the union of the states, but it did not make 
 it materially easier. The indemnity scarcely more than paid 
 the German expenses of the war, her army being nearly three 
 times as large as that of France, whose expenses in the brief 
 struggle, outside of the indemnity, were about 4,000,000,000 
 francs. It is doubtful if Germany really gained any wealth 
 except in the territory ceded to her. Her great gain was the 
 accomplishment of unity after so many struggles. 
 
 A departure has been made from the strict chronological 
 order of events for the purpose of completing without inter- 
 ruption a brief history of the important part played by the 
 Franco-German war in the collapse of the scheme of interna- 
 tional coinage, and the inauguration of the period of silver 
 demonetization. It is necessary now to return for a moment 
 to an examination of steps that meanwhile were being taken 
 elsewhere with those ends in view. The Forty-first Congress 
 sat for a month only after the inauguration of President Grant, 
 
 i Henry C. Adams. " Public Debts."
 
 TUB MINT LAWS OF THE UNITED STATES 109 
 
 March 4, 1869, and, as has been stated, did nothing with the 
 measures for conforming our coinage to that of the Latin Union 
 originating with the Fortieth. The new Secretary of the 
 Treasury was George S. Bout well, and, as soon as the depart- 
 ment was fairly organized, the matter of international coinage 
 was brought to its attention by those who were deeply inter- 
 ested in its accomplishment. It has been said that Secretary 
 Boutwell was not inclined to favor the provisions of the Sher- 
 man bill, drafted in accordance with the plan of the Paris con- 
 ference, but preferred the Kelley idea of fixing the dollar as 
 near as possible to a metrically even number. The difficulty 
 of adjusting contracts under a change so great as the Sherman 
 bill required presented itself even to a country having no 
 specie in circulation. 
 
 An examination into the question by the Treasury Depart- 
 ment necessarily involved a search of our own mint laws, and 
 when this was made it was discovered that these were scattered, 
 disconnected, and some of them obsolete, the statutes on the 
 subject not having been revised for over thirty years. Consul- 
 tation with mint experts revealed the fact that the Treasury 
 really had no authority over the mint, and that the whole sys- 
 tem needed to be modernized. Naturally, a revision of these 
 regulations, putting them into a concise and practicable form, 
 not only to meet the possibility of an international coinage, 
 but with a view to the resumption of specie payments, appeared 
 to be demanded by the interests of the government. At this 
 task the authorities set to work under the general supervision of 
 Secretary Boutwell and the immediate control of the Deputy 
 Comptroller of the Currency, John ,1. Knox, and it is seldom 
 that anything is done for the government with more thorough- 
 ness, or that efforts are made to secure information from so 
 wide a field. 
 
 It is plain enough that in a work of this kind the main 
 thing at first was to bring together into a well-digested whole
 
 HO THE DEMONETIZATION OF SILVER 
 
 the various mint regulations enacted at different times. The 
 proper operation of the mint, whatever the character of the 
 coinage, would naturally take precedence of any other ques- 
 tion. The matter of changing the value of the dollar with a 
 view to internationality in coinage could be easily determined 
 later, as Congress saw fit by a new provision in the revised 
 draft, or perhaps, a slight change of the language. The State 
 Department was carrying on a correspondence with other na- 
 tions regarding uniform coinage while this revision was in 
 preparation. But there were certain changes, entirely of do- 
 mestic concern, both as to the operation of the mint, upon 
 which authorities agreed, or as to coinage, commended by com- 
 mon consent, which were introduced in the original draft, nine- 
 tenths of which was, however, a transcript, with slight modifica- 
 tions in language in the interests of conciseness, clearness, or 
 consistency, from the then existing mint laws, mainly of the 
 law of 1837. When completed, late in 1869, the draft was 
 sent out to the various mint officials and to other experts for 
 suggestions, and the changes made were specifically noted. The 
 bill met general approval ; some suggestions were made, and of 
 these some were adopted. The Comptroller of the Currency 
 prepared an elaborate report to accompany it, enumerating 
 the changes made in existing laws, and under sub-heads care- 
 fully explaining the character of each change and the reasons 
 for making it, and, on April 25, the bill and the report were 
 together transmitted to Senator Sherman of the Finance Com- 
 mittee by the Secretary of the Treasury with a note stating 
 that it included in a condensed form all the important legisla- 
 tion upon coinage, not obsolete, since the first mint was estab- 
 lished in 1792, that there had been no revision of the laws per- 
 taining to the mint and coinage since 1837, and that it was be- 
 lieved that the measure, if passed, would greatly conduce to 
 the efficiency and economy of that branch of the public service. 
 The nature of the report is indicated by the following:
 
 FEATURES OF THE MINT BILL HI 
 
 " The method adopted in the preparation of the bill was first to 
 arrange in as concise a form as possible the laws now in existence 
 upon these subjects, witli such additional sections and suggestions 
 as seemed valuable. Having accomplished this, the bill, as thus 
 prepared, was printed upon paper with wide margin, and in this 
 form transmitted to the different mints and assay offices, to the 
 First Comptroller, the Treasurer, the Solicitor, the First Auditor, 
 and to such other gentlemen as are known to be intelligent upon 
 metallurgical and numismatical subjects, with the request that the 
 printed bill should be returned with such notes and suggestions 
 as experience and education should dictate. In this way the views 
 of more than thirty gentlemen who are conversant with the manipu- 
 lation of metals, the manufacture of coinage, the execution of the 
 present laws relative thereto, the method of keeping accounts, and 
 of making returns to the Department have been obtained with but 
 little expense to the Department and little inconvenience to corre- 
 spondents. Having received these suggestions, the present bill has 
 been framed, and it is believed to comprise within the compass of 
 eight or ten pages of the Revised Statutes every important provision 
 contained in more than sixty different enactments upon the mint, 
 assay offices, and coinage of the United States, which are the re- 
 sult of nearly eighty years of legislation upon these subjects. 
 
 "The new features of the bill now submitted are, chiefly: The 
 establishment of a Mint Bureau of the Treasury Department, which 
 shall also have charge of the collection of statistics relative to the 
 precious metals; the consolidation of the office of Superintendent 
 with that of the Treasurer, thus abolishing the latter office, and dis- 
 connecting the mint entirely from the office of Assistant Treasurer: 
 the repeal of the coinage charge, and authorizing the exchange of 
 imparted for refined bars; a reduction in the amount of wastage, and 
 the tolerance (deviation in weight and fineness) in the manufacture 
 of coin; requiring the token coinage to be of one material of uni- 
 form value, and to be redeemed under proper regulations when 
 issued in excess, and the expense of its manufacture to be paid 
 from specific appropriations, and not from the gain arising in its 
 manufacture, as heretofore; an entire change in the manner of issu- 
 ing the silver (subsidiary) coinage; discontinuing the coinage of the 
 silver dollar; limiting the amount of silver to be used as alloy, so 
 as to make the gold coinage of uniform color: the destruction of the 
 dies, not in use, annually: requiring vouchers to pass between the 
 different officers of the mint in all transfers of bullion or coin: re- 
 quiring increased bonds from officers of the mint, and authorizing 
 each officer to nominate his subordinate before appointment; and 
 also making it an offence to increase or diminish the weights used 
 in the mint." 
 
 The report called special attention to the discontinuance 
 of the silver dollar as a standard, as may be seen from the fol- 
 lowing paragraph: 
 
 "SILVER DOLLAR ITS DISCONTINUANCE AS A STANDARD. 
 "The coinage of the silver-dollar piece, the history of which is 
 here given, is discontinued in the proposed bill. It is by law the
 
 112 THE DEMONETIZATION OF 1 SILVER 
 
 dollar unit, and, assuming the value of gold to be fifteen and one- 
 half times that of silver, being about the mean ratio for the past six 
 years, is worth in gold a premium of above 3 per cent, (its value being 
 103.12) and intrinsically more than 7 per cent, premium in our other- 
 silver coins, its value thus being 107.42. The present laws conse- 
 quently authorize both a gold-dollar unit and a silver-dollar unit, 
 differing from each other in intrinsic value. The present gold-dol- 
 lar piece is made the dollar unit in the proposed bill, and the silver- 
 dollar piece is discontinued. If, however, such a coin is authorized. 
 it should be issued only as a commercial dollar, not as a standard 
 unit of account, and of the exact value of the Mexican dollar, which 
 is the favorite for circulation in China and Japan and other Oriental 
 countries." 
 
 of these proposed changes were likely to excite any 
 serious controversy in 1870. The gold standard was desired 
 by every one who was at all in favor of specie, and without any 
 uneasiness of conscience. The silver miners of the Pacific 
 slope had no desire to have their product coined at a ratio of 10 
 to 1 when commercially it stood to gold as 15-J to 1. Few peo- 
 ple in the country could remember ever having seen a silver 
 dollar, and the only question concerning it was whether it 
 should be made a part of the subsidiary coinage, or be coined 
 exclusively for trade with the East, or should be dropped alto- 
 gether. Some thought that by reducing the weight sufficiently, 
 thereby making it a token coin, the silver bullion might be at- 
 tracted to the mints and silver coins made to circulate. The 
 Director of the Mint, Dr. Linderman, in his report in 1869, 
 urged the restoration of the silver currency for change, in 
 lieu of the postal and small-note currency; as the first step tow- 
 ards and " an important adjuvant to a general resumption 
 of specie payments," and the plan was emphatically endorsed 
 by the leading commercial papers of the country. He per- 
 sistently advocated the policy, expressing the belief a year 
 later that the product of silver in Nevada and Colorado would 
 be sufficient to meet the demand. His plan was for a much 
 more debased coinage than that formerly in use, and he 
 defended it in these words, furnishing further evidence of the 
 manner in which the metals were popularly regarded :
 
 WAITING FOR DEVELOPMENTS ABROAD 113 
 
 " This is not a scheme for debasing the standard of value. Its 
 only object is to restore silver on such a basis, under legal 
 sanctions, as will enable it to keep its subsidiary place, whether 
 the chief currency be paper, as it now is, or gold, as we hope 
 it will soon be." It is not strange that the Treasury and mint 
 officials, providing in their revision of the mint laws for a gold 
 dollar as the unit of value, were disinclined to favor a debased 
 silver dollar, even for subsidiary purposes, but in view of the 
 doubts that existed they inserted in the original draft of the 
 bill, in brackets, words which, if retained, would provide for 
 a silver dollar equal in weight and fineness to the French 
 5-franc silver piece. 
 
 This bill, which was known as Senate Bill No. 859, was, on 
 April 28, referred to the Finance Committee, but was not re- 
 ported by it at that session, although it lasted till July 15, the 
 very day that France decided on war. The delay does not 
 seem to have been occasioned by any disagreement in the com- 
 mittee, for the members all favored it. One of the main rea- 
 sons seems to have been that it was not desirable for Congress 
 to act on the measure till it was discovered what steps other 
 nations, particularly France and England, were likely to take 
 towards an international coinage. The committee waited to 
 learn what modifications might be advisable in the weights of 
 the coins. The United States were at this time, like other gov- 
 ernments, in an attitude of expectancy. 
 
 On February 8, or while the bill was still in the hands of 
 the revisers, Senator Sherman had introduced the following 
 resolution : " Resolved, That the President be requested, if 
 not incompatible with the public interests, to invite a corre- 
 spondence with Great Britain and other foreign powers, with 
 a view to promote the adoption by the legislatures of the sev- 
 eral powers of a common unit and standard of an international 
 gold coinage, and that such correspondence be submitted to 
 Congress for its information and action."
 
 114 THE DEMONETIZATION OP SILVER 
 
 The President acted accordingly, and Secretary Fish sent 
 out to the various ministers communications upon the subject. 
 That sent to the Minister to Sweden will serve as a convenient 
 sample, and it will introduce the fact that the Swedish Mone- 
 tary Commission already had the formation of the Scandi- 
 navian Union well under way, and had declared for a gold 
 standard. The circular asked the Swedish government to con- 
 sider " whether it is not practicable to arrive at an assimilation 
 of coinage which will secure many of the advantages that can- 
 not be obtained without a uniform system of weights and 
 measures, and which may lead hereafter to complete unifica- 
 tion," and " to express its views upon the subject of a common 
 unit and standard of an international gold coinage with a 
 view of promoting its adoption." Minister Andrews delivered 
 a copy of the circular to the Swedish Commission, and mean- 
 while Congress adjourned. It is unnecessary to outline the 
 results of these overtures or rather lack of results for 
 after the fall of Sedan, September 2, the whole scheme fell 
 to the ground, and when the Forty-first Congress met for its 
 third session in December the Finance Committee reported the 
 Mint bill promptly (December 19), unanimously, and without 
 any changes of importance. 
 
 It was discussed during the morning hours of January 9 
 and 10, 1871. The only feature occasioning much debate was 
 an amendment, emanating from the Finance Committee, pro- 
 viding for a charge for coinage. The Senate finally struck out 
 the amendment at the earnest plea of the senators from the 
 Pacific States, and the majority of the Finance Committee 
 voted against the whole bill on its final passage rather than pass 
 it in that form. But it passed by a vote of 36 to 14, the senators 
 from the Pacific slope thinking they had won a great victory. 
 They little dreamed, apparently, that ten years afterwards 
 they would be declaiming against the passage of the measure 
 as a secret conspiracy, and against the act itself as a crime.
 
 THE SILVER DOLLAR DROPPED 115 
 
 As it was reported by the Finance Committee and as it 
 passed the Senate, the bill contained this provision: 
 
 " Sec. 15. And be it further enacted, That of the silver coins the 
 weight of the half-dollar, or piece of 50 cents, shall be 192 grains; 
 and that of the quarter-dollar and dime shall be, respectively, one- 
 half and one-fifth of the weight of said half-dollars; that the silver 
 coin issued in conformity with the above section shall be legal 
 tender in any one payment of debts for all sums less than $1." 
 
 The following section was in the bill at the start, was never 
 molested in whatever shape the measure took, and was in the 
 law as finally enacted : 
 
 "Sec. 18. And be it further enacted, That no coins, either of gold, 
 silver, or minor coinage, shall hereafter be issued from the mint 
 other than those of the denominations, standards, and weights 
 herein set forth." 
 
 The effect of this was, of course, to drop the silver dollar. 
 The next day the bill was referred by the House to the Com- 
 mittee on Coinage, Weights, and Measures, and printed in full ; 
 February 25, it was reported by Kelley, of that committee, 
 with a few amendments, the last sentence of Section 15, quoted 
 above, being changed so as to read, " which coins shall be 
 a legal tender, at their denominational value, for any amount 
 not exceeding $5 in any one payment." A week later the 
 Forty -first Congress adjourned; the Forty-second met at once 
 in special session, and five days later Kelley reintroduced the 
 measure, as his committee had reported it in the preceding 
 Congress two weeks before, and it became known as House 
 Bill No. 5. But an adjournment was taken without action a 
 month later, and Congress was not to meet again till Decem- 
 ber. 
 
 Meanwhile there were important monetary events in 
 Europe. During the month of November, 1870, the President 
 of the North German Union entered into treaties with the 
 Grand Dukes of Hesse and Baden, and with the Kings of Wiir- 
 temberg and Bavaria, concerning the articles of union of these 
 states and the pledge to establish the German empire on the
 
 116 THE DEMONETIZATION OF SILVER 
 
 1st of January, 1871. On the 18th of January, in the famous 
 Hall of Mirrors of the palace of Versailles, King William of 
 Prussia was crowned Emperor, and on the 21st of March 
 the first German assembly elected by the direct vote of the 
 people met at Berlin. Nothing remained now but to organize 
 the empire, and one of the first things done was to institute the 
 monetary reform that had so long been awaiting the comple- 
 tion of the political programme. While the Congress of the 
 United States was waiting to meet, the German Parliament 
 passed the act by which the new empire assumed the right of 
 coinage in its own name, ordained a coinage of gold coins, 
 decimal multiples of unit called the " mark," the gold mark 
 being rated as one-third of a Prussian thaler, and the relation 
 between the gold and silver mark being 15 to 1. The act also 
 provided that the coinage of the larger silver coins should 
 cease. 
 
 This was simply an act providing for a transition state 
 looking to the ultimate adoption of the gold standard, and so 
 far was entirely compatible with a purpose to follow the course 
 laid down by the conference of 18C7 for countries then on a 
 silver standard. Very little is known about some of the coins 
 that were circulating in parts of Germany at the time this act 
 was passed, but the entire stock consisted probably of some- 
 thing like three parts of silver to one of gold. The silver coins 
 continued to be legal tender, so that Germany was practically 
 on a double standard, but coining only gold; to this day there 
 remain some 400,000,000 old thaler pieces in circulation at 
 full legal tender, besides about 70,000,000 Austrian thalers 
 or vereinsthalers coined under the old treaty of 1857, and left 
 in Germany when Austria withdrew in 1867. 
 
 But this transition step was not well calculated to promote 
 an international coinage. Bismarck probably had no disposi- 
 tion at this time to " Frenchify " the coinage of the new em- 
 pire, even had it been convenient to do so. Shrewder than most
 
 GERMANY PROVIDES FOR GOLD COINAGE 117 
 
 men of his time, and having, earlier in his career, as Prussian 
 Minister to Paris, taken his own measurement of the French 
 Emperor, he regarded the plan for international coinage as a 
 Napoleonic dream. But, further than this, he found a large 
 part of the German people wedded by tradition and habit to 
 the old thalers, and it is doubtful if he would have advised the 
 Federal Council, which by the law retained considerable juris- 
 diction over coinage, to have complicated the situation of the 
 new empire by an unfamiliar coinage, even had it been other 
 than French. 
 
 The mark, though a new unit, was not a new term for coins. 
 It was found among the German people as early as the end of 
 the tenth century. The mark of Cologne was the standard 
 of payment for centuries for the traders of the Rhenish states. 
 The proposition for a unification of the German currency by 
 reckoning all transactions by marks, the mark being a third of 
 a thaler, was extensively advocated before 1860; but after that 
 time was abandoned by the German writers. The makers of 
 the empire, however, considered it, if less scientific, the most 
 practicable as a system for Germany. It indicates that when 
 a nation makes a coinage system for itself it pays very little 
 attention to the systems of other nations, but rather gives to 
 it a national characteristic. 1 
 
 On the same day that the German empire enacted its first 
 coinage measure, the Forty-second Congress convened at 
 "Washington for its second session, and another chapter in the 
 
 i The almost irreconcilable difference between the new German 
 system and that of the other great commercial nations may be ob- 
 served from the following table: 
 
 Monetary Weight, Fine- 
 
 Country, unit. grains. ness. Value. 
 
 Germany, Mark, $0.2382 
 
 France, Franc, 4.978 .900 0.1929 
 
 (^reat Britain, Pound, 123.270 .916| 4.8065 
 
 France, 25 francs, 4.823 
 
 Germany, 20 marks. 4.7CA 
 
 United States, Half-eagle, 6.14G .900 5.00
 
 118 THE DEMONETIZATION OF SILVER 
 
 career of the Mint bill was begun. It was reported favorably 
 on January 9, 1872, by Kelley, who said that the committee 
 had been over the bill " line by line, and word by word." He 
 considered the most important change that of creating a Di- 
 rector of the Mint with headquarters in the Treasury Depart- 
 ment. In the course of the discussion he said that he would 
 have preferred a wider difference between the gold and silver 
 coinage, and he also " would have liked to have made the gold 
 dollar uniform with the French system of weights, taking the 
 gramme as a unit," from which it appears that there were still 
 some hopes of international coinage after the fall of Napoleon. 
 But generally the discussion was confined simply to some feat- 
 ures of the mint regulations, and on the next day it was recom- 
 mitted to the Coinage Committee. 
 
 At this time, in the temporary absence of Kelley, the bill 
 was taken in charge by Samuel Hooper, of Massachusetts. A 
 London friend of his, Latham by name, who was acquainted 
 with Ernest Seyd, the strongest advocate of bimetallism in 
 England at that time, had sent to Hooper, early in 1872, one of 
 Seyd's books " Suggestions on American Coinage " - in 
 which disastrous consequences of silver demonetization were 
 predicted, and the fact that the United States seemed to be 
 on the point of lending a hand to that movement deplored. 
 Hooper evidently read the book with care, for he sent to his 
 friend Latham a copy of the bill then before the committee, 
 and expressed a desire that Seyd should examine it and write 
 to him any suggestions he might desire to make. " As to the 
 theory of the double valuation," he wrote to Latham, " I do not 
 understand it." 
 
 "Without awaiting a reply for he had been seeking in- 
 formation from various sources he reintroduced the meas- 
 ure on February 9th as House Bill No. 1427; it was printed, 
 recommitted, reported back four days later with some amend- 
 ments, and again printed. In this measure, for the first time
 
 SEYD'S PLEA FOE A SILVER DOLLAR 119 
 
 since the subject had been brought to the attention of Congress 
 two years before, a provision for a silver dollar appeared. The 
 section quoted above from the previous bills appeared in 
 Hooper's measure as follows: 
 
 " That the silver coins of the United States shall be a dollar, a 
 half-dollar or fifty-cent piece, a quarter-dollar or tweuty-tive-cent 
 piece, and a dime or ten-cent piece; and the weight of the dollar 
 shall be 384' grains; the half-dollar, quarter-dollar, and the dime 
 shall be, respectively, one-half, one-quarter, and one tenth of the 
 weight of said dollar; which coins shall be a legal tender, at their de- 
 nominational value, for any amount not exceeding $5 in any one 
 payment." 
 
 These changes regarding silver coinage could not have 
 been easily misunderstood, even if they were largely ignored. 
 The committee were not unaware of the warnings of the bi- 
 metallists, whatever may be said of the other members of Con- 
 gress. A few days after Hooper introduced the amended bill 
 he must have received Seyd's reply, which was written on Feb. 
 17. It was a long criticism of the bill, section by section, 
 but his chief criticism was directed against the section regard- 
 ing silver coins. He strongly argued against the discontinu- 
 ance of the silver dollar (the bill Hooper had sent to him was 
 the previous draft reported by Kelley, and, like the bill as 
 originally introduced, made no provision for a silver dollar), 
 and, after citing many reasons for his views, suggested that pro- 
 vision be made for a dollar of 400 grains, to be legal tender up 
 to $100, and for which the mint charge should be 1 per cent. 
 He thought that Congress could not be sufficiently aware of 
 the controversy that had been going on in Europe on the sub- 
 ject, and said: 
 
 "At all events. I hope you will fully investigate this subject before 
 you commit America to this course of the one-sided gold valuation. 
 Men like yourself, on framing a coinage bill, undertake a gigantic 
 responsibility, which strongly affects, not only a whole nation's wel- 
 fare and happiness, but also that of the world at large. Pray, do 
 not despise this language. The deep study of all the principles and 
 interests connected with the organization of social life warrants it. 
 
 Equivalent to the 5-franc piece.
 
 120 THE DEMONETIZATION OF SILVER 
 
 Obscure as this subject is to many people, they succeed in estab- 
 lishing their work, and when it once stands it is like a fate decreed, 
 to which all must bow because they do not see its evils clearly, and 
 it is difficult to amend it. Nay, as an existing thing it is defended 
 and elevated into a principle." 
 
 But Seyd's arguments evidently failed to convince those 
 in Congress who may have been informed of them ; to use 
 Hooper's words, " as to the double valuation," they could not 
 understand it. It was next to impossible for any one in the 
 United States then to regard silver as other than subsidiary. 
 When the bill came up for discussion, April 9, Hooper, in a 
 speech occupying ten columns in the Congressional Globe, ex- 
 plained that the committee had provided a silver dollar, but 
 " making it a subsidiary coin in harmony with the silver coins 
 of less denomination, to secure its concurrent circulation with 
 them." Stoughton, of Michigan, another member of the com- 
 mittee, in a further explanation, made this perfectly plain 
 statement: " The office of silver or subsidiary coins is simply 
 to supply the public want for small change. They are made 
 the tokens of value, not the value itself, and are designed only 
 for exchange and circulation at home up to, but never in ex- 
 cess of, the requirements of trade." If there were many 
 people in the United States at that time who held a different 
 view, there were very few in Congress. Some opposed reduc- 
 ing the silver in the dollar because the dollar was a unit of 
 value, and one or two congressmen were inclined to think that 
 small coins should be of full value. We may quote, as a 
 sample reply to these, the remark of Kelley, who, four years 
 later, became a free-silver advocate, and told his constituents 
 that the demonetization of the silver dollar in 1873 was a 
 mystery which nobody could explain. He said : 
 
 " I wish to ask the gentleman who has .lust spoken (Mr. Potter) 
 if he knows of any government in the world which makes its sub- 
 sidiary coinage of full value? The silver coin of England is 10 
 per cent, below the value of gold coin. and. acting under the advice 
 of the experts of this country and of England and France. Japan 
 has made her silver coinage within the last year 12 per cent, 
 below the value of gold coin, and for this reason: It is impossible
 
 CONGRESS SCORNS THE DOUBLE STANDARD 121 
 
 to retain the double standard. The values of gold and silver con- 
 tinually fluctuate. You cannot determine this year what will be the 
 relative values of gold and silver next year. They were 15 to 1 
 a short time ago; they are 16 to 1 now. 
 
 " Hence, all experience has shown that you must have one 
 standard coin which shall be a legal tender for all others, and then 
 you may promote your domestic convenience by having a subsid- 
 iary coinage of silver, which shall circulate in all parts of your 
 country as legal tender for a limited amount and be redeemable at 
 its face value by your government. But, sir, I again call the at- 
 tention of the House to the fact that the gentlemen who oppose this 
 bill insist upon maintaining a silver dollar worth 3% cents more 
 than the gold dollar and worth 7 cents more than two half-dollars, 
 and that so long as those provisions remain you cannot keep silver 
 coin in the country." 
 
 On May 27 Hooper again called up the bill and offered 
 a substitute, known as House Bill No. 2934, but it contained 
 exactly the same provision regarding silver coinage as the bill 
 displaced. After a discussion, mainly upon the minor coinage, 
 the bill passed yeas, 110; nays, 13. Two days later it was 
 referred to the Finance Committee in the Senate, and while in 
 its hands that session adjourned. 
 
 In his report to Congress, which reconvened on December 
 2. 1872, the Secretary of the Treasury again urged the passage 
 of the measure, as in his two previous reports, but, in view of 
 the changed value of silver, he recommended alterations in the 
 bill prohibiting the coinage of silver dollars for circulation 
 in this country, but that authority be given for the coinage of 
 a. silver dollar to be furnished at its actual cost for trade with 
 the East. He called attention to the discontinuance by Ger- 
 many and other nations of the use of silver as currency, and 
 said that the depreciation of silver was likely to continue. 
 
 The Finance Committee, whether adopting these sugges- 
 tions or reaching a similar conclusion in their own way matters 
 not, reported the bill on December 16, with the following 
 amendment of the section concerning silver coins : 
 
 " That the silver coius of the United States shall be a trade dollar, 
 a half-dollar or fifty-cent piece, a quarter-dollar or twenty-five-cent 
 piece, a dime or ten-cent piece: and the weight of the trade dollar 
 shall be 420 grains troy: the weight of the half-dollar shall be twelve 
 grammes and one-half a gramme: the qnarter-dollar and the dime
 
 122 THE DEMONETIZATION OF SILVER 
 
 shall be, respectively, one-half and one-fifth of the weight of said 
 half-dollar; and said coins shall be a legal tender at their nominal 
 value for any amount not exceeding $5 in any one payment." 
 
 After some further amendments, reported by the Finance 
 Committee, the bill was taken up on January 17, 1873, and 
 passed after considerable discussion upon several features, but 
 little regarding the new provision for silver coinage. It was 
 fully explained, however, by Senator Sherman, who, in the 
 course of the debate, said : 
 
 " This bill proposes a silver coinage exactly the same as the 
 French and what are called the associated nations of Europe, who 
 have adopted the international standard of silver coinage; that is, the 
 dollar (two half-dollars) provided for by this bill is the precise 
 equivalent of a five-franc piece. It contains the same number of 
 grammes of silver, and we have adopted the international gramme 
 instead of the grain for the standard of our silver coinage. The 
 trade-dollar has been adopted mainly for the benefit of the people of 
 California and others engaged in trade with China. 
 
 " That is the only coin measured by the grain instead of by the 
 gramme. The intrinsic value of each is to be stamped upon the coin. 
 The Chamber of Commerce of New York recommended this change, 
 and it has been adopted, I believe, by all the learned societies that 
 have given attention to coinage, and has been recommended to us, 
 I believe, as the general desire." 
 
 This precisely states the case in a few words, and it is un- 
 necessary to enter into a further statement of the historical 
 development of this modification of the purposes before pre- 
 vailing. From the first to the last the discontinuance of the 
 silver dollar as a standard of value or a unit of coinage had 
 been a feature of the reform, and was so generally accepted 
 that it occasioned only the most incidental discussion. Dur- 
 ing the debate in the Senate little was said concerning silver 
 coins, except as related to dispensing with the emblem of the 
 eagle and stamping the weight and fineness on the coins. To 
 some, that seemed a needless disregard of the national emblem, 
 and the eagle was retained by a majority of two votes. 
 
 The bill went to the House, which non-cor.curred in the 
 Senate amendments; the Senate insisted upon its action, Janu- 
 ary 27, and it went to a conference committee, where the 
 House conferees receded from most of its disagreements, and
 
 PASSAGE OF THE MINT BILL 123 
 
 the bill became a law on February 12, 1873. Thus, five years 
 after Senator Sherman introduced a bill demonetizing the sil- 
 ver dollar as a collateral standard of value, and three years 
 after the first bill for the revision of the mint laws was intro- 
 duced, the change was accomplished. In none of these meas- 
 ures did any provision for a silver dollar of the old standard ap- 
 pear, and at no stage was such a provision strongly suggested. 
 No one desired to actually make silver a collateral standard of 
 value with gold. Silver was not in circulation, and the purpose 
 of the revisers of the mint laws was to once more bring it into 
 circulation by making it a subsidiary coinage. The bill was 
 printed thirteen times by order of two different Con- 
 gresses, was discussed during five different sessions, and 
 the debates on the measure occupy 148 pages in the Congres- 
 sional Globe. The fact that the standard silver dollar was to 
 be discontinued was repeatedly brought to the attention of 
 every member of Congress in the debates and in the depart- 
 ment reports, and the purpose to make silver coins entirely sub- 
 sidiary was constantly pushed forward by the promoters of the 
 bill as one of the features commending it to favorable action. 
 
 The course of this measure through Congress is thus given 
 with considerable detail, not simply because it was the natural 
 outcome of the previous agitation for the internationalization 
 of coinage under the conditions prevailing from 1867 to 1873 
 in this country, but because it opens up what must be con- 
 sidered one of the most remarkable chapters in monetary 
 history in this country and in the world. The motives for 
 the passage of this measure have been so persistently misrepre- 
 sented during the quarter of a century that has elapsed since 
 its enactment, even by those who took a prominent part in its 
 long Congressional career, that a fuller statement of its history 
 than it really deserves, in connection with efforts at interna- 
 tional action, seems desirable. 
 
 Before the final passage of the measure several European
 
 124 THE DEMONETIZATION OP SILVER 
 
 governments had definitely arranged for the adoption of the 
 gold standard and others were preparing to take defensive 
 action. As a result of the work of the Swedish Commission, 
 a monetary treaty was concluded, December 18, 1872, between 
 Sweden and Denmark for placing the currency of the two 
 countries on a gold basis, the monetary unit being the krone, 
 weighing 6.914 grains; being nine-tenths fine, it was thus 
 worth about three cents more than the German mark and 
 seven and one-half cents more than the franc. Silver, by its 
 provisions, was coined only on government account with 
 limited legal tender, but all coins of either state were legal ten- 
 der in the other, according to the terms of the agreement. Nor- 
 way formally entered the union in June, 1873. 
 
 The Bank of the Netherlands, which for twenty years had 
 bought, at the fixed price of 104.65 florins per kilogramme, all 
 the silver ingots offered it, ceased the practice in 1872, and 
 in October of that year a commission was appointed to con- 
 sider the change taking place in the neighboring states by the 
 substitution of gold for silver as currency, and to suggest such 
 remedies as might seem expedient to counteract any influence 
 prejudicial to the Netherlands arising therefrom. The com- 
 mission reported in January, 1873, proposing the provisional 
 suspension of silver coinage, and this was done by law in May. 
 It also advised that, so long as there was a hope that Germany 
 would keep the double standard, the Netherlands should coin 
 a gold piece, and it recommended substantially the system in 
 use previous to 1847, when Holland demonetized gold, that is, 
 one standard of silver and one of gold at the ratio of 15| to 1. 
 But in October, when the policy of Germany had become more 
 apparent, the commission made a second report, in which it 
 strongly urged the adoption of the exclusive gold standard. 
 
 On the basis of this report, the government, through the 
 Minister of Finance, submitted to the second chamber a bill 
 making gold alone the standard and the gulden or florin the
 
 MOVEMENT FOR THE GOLD STANDARD IN HOLLAND 125 
 
 unit of account, .605 61 grammes fine, valued as against silver 
 at the ratio of 1 to 15.604. In supporting the measure he 
 urged that silver was likely to depreciate in consequence of 
 the amount being offered in the market. Germany was selling 
 silver largely, and Belgium was preparing to do so with the evi- 
 dent desire to continue its use as a standard of currency, while 
 the Netherlands, already financially isolated, by adhering to 
 their existing system would, in his opinion, experience a grow- 
 ing inconvenience from which relief would become more and 
 more difficult. But strong objection was made that the bill did 
 not apply to the colonies; that the old standard for them, and 
 a new one and different one for the mother country was equally 
 unnecessary and unwise, and it was urged that action should be 
 deferred until an expression from the colonies could be ob- 
 tained. Moreover, the widest difference of opinion prevailed as 
 to the fineness of the contemplated issue. That proposed by 
 the government corresponded neither with the German stand- 
 ard nor with that of the Latin Union, being above the one 
 and below the other. Some of the members gave weighty 
 reasons for joining the former, and others were equally strenu- 
 ous for conforming to the latter, and not a few clung to the 
 standard urged in the bill, mainly, it would seem, because it 
 came nearest to that used by their fathers before 1847. The 
 principle of the " dollar of the daddies," which has exerted so 
 much influence in our currency legislation, was instrumental 
 in determining the character of the German currency reform, 
 and was not wanting in Holland. 
 
 Having repeatedly discussed the project, finally for a num- 
 ber of days in succession, the Dutch chamber at last resolved 
 to divide the bill so that the sense of the body might be taken 
 on the proposition to introduce the gold standard and on the 
 rate of alloy separately, and that the latter proposition should 
 be put first. Accordingly, after several amendments had been 
 offered and rejected, the question of the alloy, as in the bill,
 
 126 THE DEMONETIZATION OF SILVER 
 
 was put to test, 29 voting for it and 40 against it. On learning 
 the result, the Minister of Finance immediately withdrew the 
 bill. 1 
 
 The progress of the German monetary policy was watched 
 closely and somewhat anxiously by the other European states. 
 Up to the end of 1872 the German gold coinage amounted to 
 twenty-one millions sterling. That the prospect was not a 
 comfortable one even at this date may be judged from the 
 financial reviews in th London press at the time. " As the 
 annual money supply of gold throughout the world is reckoned 
 at little more than 20,000,000," said the London News, " and 
 the usual demand for miscellaneous purposes is very large, it 
 follows that, if the German government perseveres in its 
 policy, the strain upon existing stocks and currencies will be 
 most severe. Unless the annual production of gold should 
 suddenly increase, the money markets of the world are likely 
 to be perturbed by this bullion scarcity." But Germany per- 
 severed. In 1872 a bill was framed for establishing the im- 
 perial gold standard in the place of the local standards still 
 maintained in the different states, and it finally became a law, 
 July 9, 1873. It provided for an imperial silver coinage on 
 government account, the maximum amount of which was fixed 
 at 10 marks per head of the population, and the legal tender 
 of which was limited to 20 marks between individuals, while 
 it was payable to the government in any sum. The Federal 
 Council was directed to designate public treasuries where re- 
 demption of silver coins should be made in gold, when pre- 
 sented in sums of not less than 200 marks. Questions of 
 weight and other details concerning the coinage were remitted 
 to the jurisdiction of the Federal Council, which also was given 
 the power of putting out of currency any coins circulating in 
 Germany, and the retirement from circulation of the existing 
 silver coin was left to administrative control. Bismarck did 
 
 j Minister Charles T. Gorham to Secretary Fish, March 12, 1874.
 
 THE GERMAN ACT OF 1873 127 
 
 not propose to have the currency question too extensively left 
 to the tender mercies of a representative body which might an- 
 tagonize his public policy, and, as he soon found, was often 
 disposed to do so. 
 
 The peculiar feature of this monetary change was that the 
 old silver coins remained unlimited legal tender, while the 
 new imperial silver was legal tender only to the amount of 20 
 marks between individuals. For all new silver coins issued 
 it was provided that an equal amount of old silver coin should 
 be withdrawn; but for the time the German currency of un- 
 limited tender consisted of silver much more than of gold. 
 Up to the preliminary law of 1871 there had been coined of 
 silver, in all, 1280 millions of marks, including 93 millions 
 of marks in Austrian thalers (vereinsthalers), which stood on 
 the same footing under the law, in respect to all payments, 
 with the thalers of German coinage. Another feature of the 
 law was the provision for the withdrawal of all bank-notes not 
 made payable in imperial currency, and for the issue of none 
 of a lower denomination than 100 marks, or about five pounds 
 sterling, or $23.82. Previously, they had been issued as low 
 as one thaler, and this restriction was calculated to maintain 
 and increase the use of silver coins in small transactions, thus 
 making it possible for the administrative authorities to throw 
 on the market the least amount of silver consistent with the ac- 
 complishment of the reform. The future effect, therefore, 
 of the change depended upon two things the amount of 
 gold absorbed for the new currency and the amount of silver 
 melted into bars from old coins called in and thrown on the 
 market. The former, of course, was calculated to make gold 
 scarcer and dearer, and the latter to make silver more plentiful 
 and cheaper. If other nations had continued to coin silver 
 freely, as they had done up to this time, it is probable that 
 the silver Germany found it could dispense with would not 
 have depressed its commercial value seriously below the ratio
 
 128 THE DEMONETIZATION OF SILVER 
 
 of 15| to 1, for with no bank-notes below 100 marks the em- 
 pire required a large amount of silver. But other nations 
 were bent on a similar reform, and still others, alarmed at the 
 prospect, hastened to restrict, and, finally, to stop silver coin- 
 age, at a time when its production was on the increase, and 
 when, because of the enlarged sale of council bills, India was 
 absorbing much less. In this situation the " silver question " 
 was born.
 
 CHAPTER IV 
 
 CONTINUED LIMITATION OF SILVER COINAGE AWAKENING IN THE UNITED 
 
 STATES 
 
 FROM 1873, which was characterized by the conspicuous 
 instances of the adoption of the gold standard just indicated, 
 to 1878, when the first important effort was made to secure 
 international bimetallism, is a period requiring close examina- 
 tion of conditions both here and abroad for a proper under- 
 standing of the reasons for the advancement of the bimetallic 
 sentiment, and for the avoidance of those misapprehensions 
 quite sure to arise from a study of monetary events in any one 
 country alone. It will be profitable to begin by fixing in the 
 mind a few dry facts, which, whether in the nature of causes 
 or results, will shed some light on the remarkable changes in 
 economic conditions, and in public opinion. 
 
 The annual average production of gold and silver in the 
 world in periods of five years, from 1861 to 1880 inclusive, as 
 compiled from Dr. Soetbeer's table of averages, was as follows: 
 
 
 
 GOLD. 
 
 SILVER. 
 
 Years. 
 
 Fine Ounces. 
 
 Value. 
 
 Fine Ounces. 
 
 Coining Value. 
 
 1861-65 
 
 5,945,582 
 
 $122,989,000 
 
 35,401,972 
 
 45,772,000 
 
 1866-70 
 
 6,270,086 
 
 129,614,000 
 
 43,051,583 
 
 55.663,000 
 
 1871-75 
 
 5,591,014 
 
 115,577,000 
 
 63,317,014 
 
 81,864,000 
 
 1876-80 
 
 5,543,110 
 
 114,586,000 
 
 78,775,602 
 
 101,851,000 
 
 Total Pro- 
 
 
 
 
 
 duction. 
 
 
 
 
 
 1861-70 
 
 61,098,340 
 
 81,263,015,000 
 
 392,267,776 
 
 8-507,174,000 
 
 1871-80 
 
 55,670,618 
 
 1,150,815,000 
 
 710,463,078 
 
 918,578,000 
 
 8112,200,000 
 
 $411,404,000 
 
 Difference, 
 t 
 The value of the world's product of gold, therefore, was 
 
 $112,200,000 less in the latter decade than in the former, and 
 
 of the product of silver $-111,404,000 greater. 
 9
 
 130 
 
 AWAKENING IN THE UNITED STATES 
 
 From the reports of the Director of the Mint is derived the 
 following statement of the coinage of gold and silver in the 
 world, 1873-80, and the gold coinage of the United States and 
 Germany for the same period : 
 
 WORLD. 
 
 GERMANY. 
 
 UNITED STATES. 
 
 Year. 
 
 Gold. 
 
 Silver. 
 
 Gold. 
 
 Gold. 
 
 1873 
 
 $257,630,000 
 
 $131,544,000 
 
 $140,490,000 
 
 $57,022,000 
 
 1874 
 
 135,778,000 
 
 102,931,000 
 
 22,264,000 
 
 35,254,000 
 
 1875 
 
 205,340,000 
 
 123,143,000 
 
 39,608,000 
 
 33,553,000 
 
 1876 
 
 213,119,000 
 
 126,577,000 
 
 37,943,000 
 
 38,178,000 
 
 1877 
 
 173,675,000 
 
 78,402,000 
 
 26,784,000 
 
 44,078,000 
 
 1878 
 
 188,386,000 
 
 161,191,000 
 
 29,742,000 
 
 49,786,000 
 
 1879 
 
 90,752,000 
 
 104,888,000 
 
 11,043,000 
 
 39,080,000 
 
 1880 
 
 149,725,000 
 
 84,611,000 
 
 6,662,000 
 
 62,308,000 
 
 Total, $1,414,405,000 $913,287,000 $314,536,000 $359,259,000 
 
 Recoinage of gold during the period 
 Recoinage of silver 
 Production of gold " 
 
 Production of silver " 
 
 Gold coinage less recoinage 
 Silver coinage less recoinage 
 
 $190,000,000 
 145,000,000 
 877,554,000 
 738,187,000 
 
 1,228,405,000 
 768,287,000 
 
 An examination of these figures shows: 
 
 1. The value of the production of gold exceeded that of 
 silver for this period $139,367,000. 
 
 2. The coinage of gold exceeded its production $536,851,- 
 000, and the coinage of gold, less recoinage, exceeded its pro- 
 duction by $350,851,000. 
 
 3. The coinage of silver exceeded its production $175,- 
 100,000, and the coinage of silver, less recoinage, exceeded its 
 production by only $30,100,000. 
 
 4. While the demand for both metals was in excess of 
 the production, the product of gold was but 62 per cent, of the 
 total coinage, and about 71 per cent, of the coinage, less re- 
 coinage; but the production of silver was about 81 per cent, 
 of the total coinage, and 96 per cent of the coinage, less re- 
 coinage. 
 
 5. The gold coinage of Germany and of the United States 
 amounted to nearly one-half of the gold coinage of the entire
 
 A CHANGE IN CONDITIONS 131 
 
 world. If, to their coinage is added that of the Scandinavian 
 states and of the Netherlands, which began to coin gold in this 
 period, the total is more than one-half of the gold coinage of 
 the world in this period, and was nearly as much as the pro- 
 duction. 
 
 It is unfortunate that there are no sufficiently authentic 
 statements of the relative coinage of the world for the period 
 of ten years preceding 1873, for the purposes of comparison, 
 but we have already seen that it was a period characterized 
 by an abundance of gold, when Great Britain was the only 
 country of consequence maintaining a gold standard, and by a 
 scarcity of silver everywhere except in the far East. 
 
 The change in the conditions is apparent. It is unfortunate 
 also, that it is impossible to secure any definite data as to the 
 amount of gold and silver consumed in the industrial arts in 
 this period. It has been variously estimated, and, even adopt- 
 ing the minimum, it must have amounted to $40,000,000 for 
 gold and $20,000,000 for silver. Recent investigations by the 
 Bureau of the Mint indicate that in recent years the United 
 States, England, Erance, and Switzerland alone annually con- 
 sume in the arts bullion worth as much as that above estimated 
 for the whole world before 1873, so that the estimate can 
 hardly fail to be on the safe side. If, then, from the gold pro- 
 duction of the years 1873-80 is deducted bullion to the value 
 of $320,000,000, and from the silver production bullion to the 
 value of $160,000,000, the amount left available for money 
 would be, of gold, but about 45 per cent, of the coinage, less 
 recoinage, and of silver but 70 per cent. 
 
 Under these circumstances it would have been irrational to 
 have expected an actual decline in the value of either metal, 
 as compared with most commodities of commerce, but it would 
 have been the natural thing to expect a change in the relative 
 value of the two metals. Although both were demanded in 
 excess of their production, the demand for gold suddenly be-
 
 132 
 
 AWAKENING IN THE UNITED STATES 
 
 came pressing, while that for silver suddenly relaxed. But this 
 relaxation could not have been due to reduced coinage during 
 the first part of the period. It was not till 1880 that the pro- 
 duction of silver began to exceed its coinage. It is difficult, if 
 not impossible, to find a reason for believing that the value 
 of silver suffered any perceptible decline, as measured by the 
 price of articles of commerce, until long after that time. But 
 as compared with goM the demand for silver fell behind, and 
 the world hastened to aggravate the situation. 
 
 From a carefully prepared table submitted to the Inter- 
 national Conference of 1881 by Dr. Broch, of iSTorway, it ap- 
 pears that the total value of silver imported into India from 
 1855 to 1880 was $1,086,259,300, and of gold $481,781,000, 
 while the total amount of council bills sold in London during 
 the period was equivalent to $902,456,000. The average an- 
 nual importations, therefore, were of silver about $43,450,300, 
 and of gold about $15,271,000, and the average amount of 
 council bills sold about $36,098,000. But a striking change 
 took place about 1870. The table shows the following for the 
 Indian fiscal years 1870 to 1880: 
 
 Fiscal 
 
 Importation 
 
 Importation 
 
 Council Bills 
 
 Average Ratio, 
 
 Year. 
 
 of Silver. 
 
 of Gold. 
 
 Bold in London. 
 
 Silver to Gold, 
 
 
 
 
 
 London market. 
 
 1870-71 
 
 $12,511,400 
 
 813,467,000 
 
 $42,347,000 
 
 15.58 
 
 1871-72 
 
 37,600,000 
 
 17,297,000 
 
 49,290,000 
 
 15.55 
 
 1872-73 
 
 9,089,800 
 
 12,692,000 
 
 69,090,000 
 
 15.71 
 
 1873-74 
 
 19,476,800 
 
 8,980,000 
 
 67,069,000 
 
 16.00 
 
 1874-75 
 
 28,444,400 
 
 10,111,000 
 
 55,178,000 
 
 16.28 
 
 1875-76 
 
 16,280,000 
 
 8.888,000 
 
 64,761,000 
 
 16.85 
 
 1876-77 
 
 46,962,400 
 
 6,989,000 
 
 69,832,000 
 
 17.56 
 
 1877-78 
 
 74,151,900 
 
 7,642,000 
 
 54,830,000 
 
 17.37 
 
 1878-79 
 
 26,315,300 
 
 9,401,000 
 
 77,855,000 
 
 18.33 
 
 1879-80 
 
 45,143,500 
 
 9,923,000 
 
 86,245,000 
 
 18.18 
 
 Total, 
 
 Total, 
 
 1855-70 
 Annual 
 Average, 
 
 1855-70 
 
 1870-80 
 
 8315,975,500 8105,390,000 8636,497,000 
 
 8772,213,800 8376,391.000 8265,959,000 
 
 8-51,480,920 
 31,597,550 
 
 825,092,730 
 10,539,000 
 
 817,730,600 
 63,649,700
 
 INCREAS2D SALE OP COUNCIL BILLS 133 
 
 Some important facts are obvious from this table. During 
 the period of fifteen years ending in 1870, India absorbed more 
 than twice as much silver as she did in the next ten years; for 
 the latter period the annual importations averaged over $20,- 
 000,000 less than the annual average of the former period, 
 and this notwithstanding the increased importations from 
 1877 to 1880, by'reason of the severe famine that prevailed in 
 southern and western India. Otherwise the importations of 
 the latter period would have been materially less. During 
 these three years of famine silver ornaments to the value of 
 332 lacs of rupees, or about $16,000,000, were brought to 
 the Bombay mint to be converted into rupees, so that the de- 
 mand for silver was urgent, and yet in only one year did the 
 value of silver imported exceed the annual average of the 
 period from 1855 to 1870. In the ten years 1861-70 India im- 
 ported $200,000,000 more of silver than in the ten years 
 1871-80. 
 
 The cause of this decline is apparent from the change 
 which took place about 1870 in the amount of council bills 
 sold. As remittances, these bills, sold to settle India's debt to 
 England, took the place of bullion, and, merchants finding 
 them more convenient than silver, they were sold in the ten 
 years from 1870 to 1880 to a value of nearly tw r o and one-half 
 times that of the preceding fifteen years, and the annual aver- 
 age sold in the seventies was nearly four times that from 1855 
 to 1870. This $45,000,000 worth of silver withheld from 
 the Indian market annually by the sale of council bills repre- 
 sented one-half of the annual product of the world during 
 much of the decade. The difference in India's absorption of 
 gold between the two periods may be accounted for partly by 
 the increase in the sale of council bills, partly because of the in- 
 creased demand for gold in Europe and America, and partly 
 because silver became cheaper. During the period of greatly 
 increased gold production, while silver was worth more than
 
 134 AWAKENING IN THE UNITED STATES 
 
 gold at the ratio of 15.50 to 1, remittances in gold were easy 
 and natural; India absorbed a vast treasure and kept it. This 
 only served to aggravate the stringency in the market when the 
 demand for gold was suddenly increased. 
 
 No responsibility, however, for the decline of silver, as 
 compared with gold, during this period can be laid at the doors 
 of the United States, unless it be because ef their increased 
 production of the metal. In no five years in the previous his- 
 tory of the mint was one-half the silver coined that was coined 
 in the five years following the so-called Demonetization Act of 
 1873, and not till 1883 was as much coined under the Bland- 
 Allison Act as was coined in the year preceding its enactment. 
 
 Moreover, if the available statistics are correct, the net re- 
 sult of Germany's monetary operations could not alone have 
 occasioned a serious surplus in the silver market. Baron von 
 Thielmann, the German delegate to the conference of 1881, 
 reported that up to the end of 1880 the government had sold 
 in round numbers $135,000,000 of fine silver. But the silver 
 exports for the years 1873-81 are reported as amounting to but 
 $93,000,000, while the imports were $87,000,000, and the 
 German production of silver amounted to $50,000,000. The 
 imports and productions, less the exports, leaves about $44,- 
 000,000 as Germany's net absorption of silver during those 
 eight years when she was supposed to be flooding the market. 
 The imperial silver coinage for the same time, on the same au- 
 thority, amounted to 427,000,000 marks, or about $102,000,- 
 000. The total amount of old coins withdrawn and delivered 
 to the mint to be made into imperial coins was, up to the end of 
 1880, only about $90,000,000, and it is doubtful if all of this 
 had left the mints by that time ; so that if Germany did not con- 
 sume in her imperial coinage any new silver, she at least ab- 
 sorbed the metal for industrial or other purposes to the value 
 of $44,000,000 during the eight years. 
 
 Summarizing these statements of the commercial and
 
 FORCING THE METALS APART 
 
 135 
 
 monetary conditions of the seventies as compared with the 
 sixties, the following facts tending to enhance the demand 
 and value of gold as compared with silver will be observed : 
 
 1. Decrease in the production of gold 
 
 . $112,000,000 
 
 2. Gold coinage in excess of its production (1873-1880) 
 
 over and above silver coinage in excess of its pro- 
 duction 300,000,000 
 
 3. Increase in the production of silver . . . 411,000,000 
 
 4. Decrease in India's absorption of silver . . 200,000,000 
 
 5. Increase in the sale of council bills over and above 
 
 the decrease in silver remittances . . . 194,000,000 
 
 All these conditions prevailing together tended to force 
 the two metals from that relationship as to value that had 
 been maintained for a long period. It is doubtful if any two 
 of them \vould have seriously disturbed that relationship, but 
 all together the disturbance became inevitable. If the in- 
 creased demand for the coinage of gold had not occurred, the 
 relationship might have withstood the other phenomenal ten- 
 dencies. Indeed, the surprising thing about it is that, in 
 the face of these tendencies, the change in the relative value 
 of the two metals was so slight in the seventies, and the only 
 explanation of it is that silver was still demanded for industry 
 and coinage to an amount in excess of the available supply. 
 The following table shows the average quotation of bar sil- 
 ver in London per ounce British standard (.925) and the 
 equivalent in United States gold coin of an ounce 1000 fine at 
 the average price during the two periods of 1861-70 and 1871- 
 80: 
 
 1861 
 1862 
 1863 
 1864 
 1865 
 1866 
 1867 
 1868 
 1869 
 1870 
 
 60U 
 
 50* 
 
 60 
 
 
 1.333 
 
 1871 
 
 1.346 
 
 1872 
 
 1.345 
 
 1873 
 
 1.345 
 
 1874 
 
 1.338 
 
 1875 
 
 1.339 
 
 1876 
 
 1.328 
 
 1877 
 
 1.326 
 
 1878 
 
 1.325 
 
 1879 
 
 1.328 
 
 1880 
 
 60* 
 
 59J 
 
 58* 
 
 52| 
 
 52* 
 6H 
 
 1.326 
 1.322 
 1.298 
 1.278 
 1.246 
 1.156 
 1.201 
 1.152 
 1.123 
 1.145
 
 136 AWAKENING IN THE UNITED STATES 
 
 Some facts which appear from this table are: 
 
 1. From 1861 to 1870 the average price varied within two 
 cents and one mill per ounce, the net decline being only seven 
 mills, though the production increased 20 per cent. 
 
 2. While the average price fell below the French coining 
 ratio in 1867, it was not till 1874 that it fell below the coining 
 ratio of the United States. 
 
 3. The first heavy fall occurred in 1873; it corresponded 
 with an increase in production of about 25 per cent., yet the 
 price fell only two mills when the production of 1871 ex- 
 ceeded that of 1870 by 19 per cent.; and the price in 1871 was 
 actually a mill higher than in 1869, though the production 
 was 28 per cent, greater. 
 
 4. Though the production in 1872 was nearly 50 per cent, 
 more than in 1869, the average price in the former year was 
 but one-eighth of a penny, or about a quarter of a cent lower 
 than in the latter. 
 
 5. Though the production in 1880 was more than double 
 that of 1869, the average price in the former year was only 
 
 -18 cents an ounce lower than in the latter. 
 
 The inevitable conclusion from these facts is that the in- 
 creased production would have had little influence on the price 
 of silver had not the demand for gold been suddenly increased 
 and the demand for silver been suddenly relaxed by the closing 
 of mints to it in Europe, and by the increased sale of coun- 
 cil bills in India. Here the reader will perceive the basis for 
 one of the main arguments for the practicability of bimetal- 
 lism, which developed into such prominence in the decade 
 we are about to consider. 
 
 In resuming the study of the course of events among the 
 nations, Europe naturally demands attention first, for, as has 
 been noted, the action of the conference of 1867 was quickly 
 followed by an earnest discussion of the question of the stand- 
 ards, the general belief in the advantages of the gold standard
 
 BELGIUM PERPLEXED 137 
 
 abiding, however, notwithstanding the warnings and argu- 
 ments of a new school of able and zealous bimetallists. When, 
 after the German and Scandinavian monetary reforms, the 
 commercial value of silver began to fall seriously below its 
 coining value at the ratio of the Latin Union, the European 
 governments ceased to regard the subject with complacency. 
 But in the United States, where silver still commanded a bet- 
 ter price in the markets than the mints would have yielded, 
 had its coinage been free, and while the government was ab- 
 sorbing as large a part of the production of the country as it 
 could secure in the coinage of trade dollars and fractional coins 
 to take the place of " shinplasters," the subject of standards 
 awakened no controversy indeed, was either unheard of or 
 regarded with indifference. 
 
 Xo European government was more perplexed than Bel- 
 gium. It had long been a partisan of the gold standard, and 
 was bound by treaty to the double standard of the Latin 
 Union. In 1873 it found on one side Germany, seeking gold 
 and discarding silver, and on the other France, its monetary 
 ally and the holder of much of its coinage. Its mints were 
 open to silver at the ratio of 15.50 to 1, and commercially it 
 was fluctuating wildly and barely averaging better than 16 
 to 1. Immediately after the passage of the German coinage 
 act, the Belgian Minister of Finance asked the Bank of Bel- 
 gium what measures could be taken to parry the effects of the 
 apparently inevitable depreciation of silver. The directors 
 unanimously replied that they were in favor of the single 
 standard, regarding the simultaneous use of two different and 
 variable metals in measuring values as an attack upon logic 
 and good sense. A monetary commission was appointed, and 
 at its sessions the bimetallists pleaded their cause with fervor. 
 " Debtors, and, among them, the state," said Professor Lave- 
 leye, Belgium's most celebrated economist, " have the right to 
 pay in gold and silver, and this right cannot be taken away
 
 138 AWAKENING IN THE UNITED STATES 
 
 without disturbing the relation of debtors and creditors to 
 the prejudice of debtors, to the extent of, perhaps, one-half, 
 certainly of one-third. To increase all debts at a blow is a 
 measure so violent, so revolutionary, that I cannot believe 
 the government will propose it or that the Chambers 
 will vote it." But, while the commission disagreed with him, 
 no way could be found to safely break with the Latin Union, 
 and during the whole year the Belgian mint was kept busy, 
 coining over 100,000,000 francs of silver, but not a franc in 
 gold. 
 
 France was in a peculiar position. Demoralized by defeat 
 and the fall of the empire, its capital for a time under a com- 
 munal reign of terror, and the resources of the whole nation 
 strained to pay the indemnity demanded by the Germans, 
 there was little opportunity for the consideration of any ques- 
 tions save those of reconstruction. It was not till January, 
 1874, when Thiers had succeeded in bringing some order out 
 of the chaos of conflicting policies, that, in view of the appeals 
 of other states, the representatives of the Latin Union were 
 called together. Again did Belgium and Switzerland plead 
 for the adoption of the gold standard, claiming that if their 
 advice had been followed in 1865 the union would not have 
 found itself in a position requiring defence. But, though 
 Parieu and others long identified with the monetary policy of 
 France favored gold, the bimetallists now preponderated in in- 
 fluence. They pointed out that the adoption of the gold stand- 
 ard by the union would further depreciate the value of silver, 
 of which so much was in the hands of the people; besides, 
 France had suspended specie payments, and, naturally, did 
 not desire the demonetization of one of the precious metals 
 which had always been sought for by the people, and had so 
 recently answered the purpose of paying a considerable portion 
 of the war indemnity. The result was a, compromise. On 
 the 30th of January a treaty, supplementary to that of 1865,
 
 THE STBUGGLE IN HOLLAND 139 
 
 was adopted, whereby it was agreed that the coinage of the 
 union, exclusive of subsidiary coins, should be limited to 
 140,000,000 francs. The proportion was fixed at 12,000,000 
 francs for Belgium, 60,000,000 for France, 40,000,000 for t 
 Italy, and 8,000,000 for Switzerland, and by a special article 
 Italy was allowed to coin for the reserve of her national bank 
 an additional 20,000,000 francs. The delivery of coins upon 
 mint receipts from December 31, 1873, was made applicable 
 upon these quotas. But while these limits were fixed, any 
 country might decline to coin the quota assigned to it, and 
 Belgium and Switzerland did so. 
 
 The government of the Netherlands was not content with 
 the law of May, 1873, which simply suspended the coinage of 
 silver except on government account, and, in accordance with 
 the advice of its monetary commission, kept pressing for the 
 adoption of the gold standard and the sale of existing florins. 
 But the two chambers favored a provisional monetary law, and 
 such was passed in June, 1875. It introduced into the coinage 
 a 10-florin gold piece of full legal tender, to be freely coined 
 (though subject to the convenience of the state) on the basis 
 of 6.048 grammes fine, being equal to 10 florins, or at the ratio 
 of 15f to 1. The act also provided for the suspension of silver 
 coinage till the end of 1876, but the States-General would not 
 agree to the calling in of silver coins to be melted and put on 
 the market. Just at that time silver coins occupied a peculiar 
 position in Holland, their value being regulated neither by 
 the market value of gold nor by that of silver. For some 
 reason the demand for coin greatly increased between 1873 
 and 1875, so that in the latter year, while the value of silver 
 as a metal was declining in the market, Dutch silver coins were 
 appreciated as against gold, the rate of exchange on London 
 falling as low as 11.12 florins to the pound sterling. This 
 situation was not helped by the new gold coins minted in the 
 latter half of 1875 and 1876, for they were not used in internal
 
 140 AWAKENING IN THE UNITED STATES 
 
 circulation, but were kept in reserve. Silver and paper florins 
 constituted the currency of the country except for foreign ex- 
 change. But the government, though considering the general 
 adoption of the gold standard a mistake, thought that Hol- 
 land's interests could be protected only by disposing of its 
 silver before it depreciated further, and by making the metallic 
 currency of full legal tender consist entirely of gold. So an- 
 other bill was introduced by which authority was given to the 
 executive not only to coin gold, but also to withdraw silver 
 from circulation and to sell it in such a manner and to such 
 an extent as might be deemed necessary. After a prolonged 
 debate it was carried through the lower house by a vote of 37 
 to 35, but was rejected in the first chamber, which strongly 
 objected to an eventual demonetization and sale of silver, 
 deeming it the proper course not to enter into any fresh legisla- 
 tion on the subject, but simply to prolong the provisional law 
 of 1875. Under these circumstances there was nothing for 
 the government to do but to bring in a bill proposing the re* 
 newal of the law of 1875 for another twelve months, and in 
 doing so it gave the States-General to understand that in the 
 course of that further twelve months another attempt would be 
 made to settle the matter finally; but when the time came the 
 conditions had so changed, there being a general European 
 awakening to the gravity of the situation, that the government 
 considered it sufficient to prolong the suspension of silver coin- 
 age till otherwise provided by law, and a bill to that effect was 
 adopted by both chambers late in 1877. 
 
 This change in the situation was due to the indications of 
 extreme anxiety among all the commercial nations as to the 
 future effect of the continued demonetization and consequent 
 depreciation of silver. Such distinguished economists as Wo- 
 lowski, Courcelle-Seneuil, and Cernuschi in France, Seyd in 
 England, Laveleye in Belgium, and TV. C. Mees in Holland, 
 had been waging a persistent and vigorous warfare in the re-
 
 HOLLAND SEEKS A BIMETALLIC CONFERENCE 141 
 
 views against the exclusive gold standard and in favor of a 
 new doctrine, international bimetallism; its effect, taken with 
 that of the depreciation of silver and the uncertainties of ex- 
 change, was to produce a state of doubt as to the desirability 
 of the exclusive gold standard, or of actual belief in the neces- 
 sity of the general adoption of the double standard. At least 
 as early as 1875 these economists had urged the calling of 
 another international conference to undo the results of that of 
 1867, maintaining the position that, if all civilized nations 
 were to adopt the double standard, with a uniform proportion, 
 a stability in the respective values of the two metals would be 
 created such as could not be attained in any other way. 
 
 Commercial bodies all over Europe began to take up the 
 question late in 1875. At a convention of the Society of the 
 Netherlands for the Promotion of Industry held at Devanter 
 the opinion prevailed that a serious danger threatened the 
 monetary circulation, not only of the Netherlands and her 
 colonies, but of all civilized nations. The delegates shared 
 the opinion of the government that under the existing circum- 
 stances the Netherlands had no alternative but to adopt the 
 gold standard, but they voted to address the King as to the 
 desirability of securing an international understanding or 
 agreement for the adoption of the double standard, deeming it 
 the only way to check the depreciation of the white metal. 
 The address was presented to the King in July, 187G. After 
 treating of the stability in the relative value of the two metals 
 during the great increase in the production of gold, and at- 
 tributing it to the fact that the mints of so many nations were 
 open to the coinage of both gold and silver, and expressing the 
 belief that the same result would follow the general re-open- 
 ing of the mints to silver, the address continued : 
 
 " In view of all the advantages we have here enumerated, ad- 
 vantages which, in our judgment, are far from being imaginary, 
 would it not be desirable to convene, at an early day. not a diplo- 
 matic congress, but an international monetary conference, to which
 
 143 AWAKENING IN THE UNITED STATES 
 
 all governments might send men specially qualified for the service 
 and most conversant with the subject? To such a conference, the 
 two following questions might be submitted: 
 
 " Is it, or not, probable that if all civilized nations were to adopt 
 the double standard, with a uniform proportion of 15.50 to 1, as 
 the intrinsic value of gold and silver legal-tender money, a stability 
 in the relative value of the two metals would be thus obtained during 
 a long period of time, which, if not absolute, would certainly be very 
 great; and that the oscillations of that value would be very small 
 compared with those which have taken place during the course of the 
 present century. 
 
 " If this question should be decided in the affirmative, what meas- 
 ures should be submitted to the several governments, iii order to 
 secure this desired uniformity? 
 
 " Without anticipating the answer which competent judges might 
 give to these questions, we venture to express the opinion that it 
 would not be desirable to agitate, at the same time, the question of 
 the unification of coinage. Every country holds, with a certain 
 tenacity, to its national money, around which its historical tradi- 
 tions cluster; and the attempt to combine on a new international 
 monetary unit would meet with a formidable opposition in nearly all 
 countries against any unification of moneys. 
 
 " The several countries should simply engage that, if they have 
 the single gold standard, they will add to it legal coins of silver; 
 if they have the silver standard, that they will add to it legal coins 
 of gold, with a uniform proportion of 15.50 to 1. Countries having 
 the double standard, but a different proportion than that of 15.50 to 
 1, would be required to conform to that proportion. In all countries 
 of the monetary union all debts should be payable indifferently in 
 money of one or the other rnetal; individuals should have the right 
 to have bullion of either metal converted into legal tender coin, ac- 
 cording to the statutory conditions prevailing in each country. 
 
 " The government which shall gain the adhesion of other govern- 
 ments to the plan of convoking an international monetary conference 
 will, in our opinion, render an eminent service, not only to its own 
 citizens, but to all countries of the world. 
 
 "According to a communication made by the Minister of Finance, 
 in the month of May, 1870, it appears that the government of your 
 Majesty has considered the plan of an international agreement, look- 
 ing to the general adoption of the double standard, but has decided 
 that all attempts in that direction would be without avail. Since 
 that time, however, the depreciation of silver has gone so much 
 further tnan before that a new attempt would perhaps meet with a 
 more favorable reception." 
 
 It appears, therefore, that as Mees, of the Netherlands, was 
 the first to advocate a plan of international bimetallism, so the 
 first governmental suggestion of an international conference in 
 behalf of a general bimetallic arrangement came from his gov- 
 ernment before many in the United States had really awak- 
 ened to the fact that something had happened to silver. In
 
 PROSPERITY OF FRANCE 143 
 
 sounding the other governments the Dutch ministers found 
 that they either regarded the project with disfavor or as pre- 
 mature, and the natural conclusion was that the attempt would 
 be futile. While the economists were tearing each other's 
 opinions into shreds, financial circles were balancing on a 
 doubt and statesmen were perplexed. The old gospel of the 
 gold standard had not lost its force; a double standard of vary- 
 ing values as a measure of other values seemed as illogical 
 and absurd as ever. . But they began to wonder if, after all, it 
 might not be practicable. The doctrine that gold was the 
 natural standard of the stronger and richer nations, and silver 
 of the weaker and poorer nations, was still extensively held by 
 financiers, but the proud Germans, who had put their currency 
 on a par with England's, were perplexed and in doubt when 
 France, after spending 11,000,000,000 francs on an unsuccess- 
 ful war and suffering the losses of a reign of terror, began to 
 prosper beyond the other nations of the earth, gathering stead- 
 ily and without any apparent effort a rich harvest of gold, 
 while her mints w r ere either freely open to silver, or, after 
 1874, to as much as 60,000,000 francs a year. The following 
 extract from a letter of December 4, 1874, from the United 
 States Minister at Paris, Mr. Washburne, to Hamilton Fish, 
 Secretary of State, is instructive at this point : 
 
 " The exportations from France of this year will amount to a fab- 
 ulous sum. Notwithstanding the enormous taxes, the financial con- 
 dition of the country is a marvel to the nations. All the countries 
 of Europe are complaining that France is gaining all the gold. The 
 condition of the Bank of France excites the wonder and admiration 
 of all financial men. It is a long time since specie payments have 
 been practically resumed. Five-franc bank-notes have gone out of 
 circulation, and, for months, the bank has not paid out any 20-franc 
 notes. It will probably not be long before the whole circulation 
 under 50 francs will be in gold and silver. All these results have 
 been accomplished without talk, boasting, or parade, and what a 
 humiliating contrast it is to us! Proclaiming ourselves constantly 
 the " greatest, richest, freest, noblest " government on the face of 
 the earth, our promises to pay are to-day at 12 per cent, discount." 
 
 There were, at the lowest estimate, fully 1,500,000,000
 
 144 AWAKENING IN THE UNITED STATES 
 
 francs of silver of full legal tender in France at that time, 
 and about 500,000,000 in the vaults of the bank. It is not 
 strange, therefore, that opinion in France was very much di- 
 vided as to the proper course to pursue. The depreciation of 
 silver threatened her currency; still she was wonderfully pros- 
 perous. Neighboring nations threatened to pour their dis- 
 carded silver into her mints and take away her gold; still the 
 gold kept flowing to her. Her confederates in the Latin 
 Union were pleading with her to at once adopt the gold stand- 
 ard, and so were some of her own ablest statesmen; but if she 
 did, what would become of her immense stock of silver, and 
 how could Belgium and Switzerland redeem all their silver 
 circulating in France and held in the bank? 
 
 The battle of the standards never, perhaps, waged so 
 fiercely anywhere as it did in France at that time. Conspicu- 
 ous on the side of gold were Chevalier, Parieu, Victor Bonnet, 
 Frederic Passy, and Leroy-Beaulieu, and they had for their 
 organs the Journal des Debats and the Economiste. On 
 
 O 
 
 the other side were Leon Say, Magne, Wolowski, Andre, 
 Courcelle-Seneuil, and Cernuschi, having for their organs the 
 Sieclc and the Repiiblique Frangais. Leon Say, while a bi- 
 metallist, was a conservative one, and opposed keeping the 
 French mints open to silver under the existing circumstances ; 
 indeed, none of the bimetallists considered their system prac- 
 ticable without the co-operation of the great commercial na- 
 tions. Their chief fight was to prevent the adoption of the 
 gold standard by France or any other nation. In this condi- 
 tion of the controversy the newly elected Chambers met early 
 in 1876. One of the first acts of the Minister of Finance was 
 to present a bill empowering the government to restrict the 
 coinage of silver in so far as it might be deemed necessary, or, 
 in other words, not to avail itself to the full extent of the right 
 granted to France by the last agreement of the union. It 
 should be kept in view that, while that agreement established
 
 RUSSIA SUSPENDS SILVER COINAGE 145 
 
 a maximum amount of coinage, it established no minimum, 
 and that in 1874 and 1875 France coined the maximum al- 
 lowed her only because her own laws did not allow her to do 
 otherwise. The object of the bill was to alter this state of 
 things. It \uas brought before the Senate on the 21st of 
 March, and gave rise to a long and interesting debate in which 
 Parieu, so long eminent because of his special knowledge of 
 monetary matters, attacked the principle of the double stand- 
 ard vigorously, while Rouland, Governor of the Bank of 
 France, with marked ability defended it. The bill passed and 
 the government soon began to avail itself of its privileges. 
 
 The actual result was, therefore, that by the middle of 
 1876 none of the mints of the Latin Union were open to the 
 coinage of silver except that of Italy, and as her currency was 
 on a greatly depreciated paper basis, any silver coined there 
 was immediately exported. Indeed, between 1872 and 1876 
 Italy exported more silver than Germany sold, and a large 
 part of it went into France. In the summer of 1876, Spain 
 practically severed its relationship with the Latin Union by 
 interdicting the coinage of silver except on government ac- 
 count, the government at the same time declaring its inten- 
 tion of limiting its legal tender to 150 pesetas, or about $28. 
 
 Even Russia, though nominally maintaining a silver stand- 
 ard, was compelled to suspend the coinage of silver the same 
 year by a state of things both peculiar and suggestive. It was 
 brought about by its forced currency of inconvertible " bills 
 of credit," the name which Russian paper money bears. In 
 July, silver, being wcrth 48-J pence per ounce in London, was 
 depreciated as compared with gold 27.12 per cent. The gold 
 half-imperial was worth at St. Petersburg in Russian paper 
 six roubles, twenty-six copecks, the paper being depreciated 
 as compared with gold 21.47 per cent. Thus the paper was 
 worth more in gold than the silver it nominally represented. 
 
 Under these conditions it became profitable to send silver into 
 10
 
 146 AWAKENING IN THE UNITED STATES 
 
 Russia to be transformed into metallic roubles. With 1000 
 paper roubles one could buy a draft on London for 130 Is. 
 6(/., and that would buy 664j ounces of silver, which at the 
 Russian mints gave the right to receive 1061 roubles, 67 co- 
 pecks, a profit of over 6 per cent., and by virtue of the law r 
 the silver money was like the bills of credit received at a 
 nominal price. The government, therefore, very quickly sus- 
 pended the coinage. 
 
 Manifestations of concern over the prevailing monetary 
 tendencies appeared in England as early as anywhere. Her 
 cheerful belief that the gold standard was the only logical and 
 proper one for the highly civilized began to be disturbed by 
 the conviction that her enjoyment of it depended somewhat 
 upon her success in keeping it as exclusively as possible for 
 herself. It would not do to share it with too many other na- 
 tions. When it was seen that, in spite of an inconveniently 
 high rate of discount, the gold of the Bank of England con- 
 tinued to pass into France and the United States, the gov- 
 ernmental policy changed from one of gold monometallism for 
 the civilized world to one of gold monometallism for Eng- 
 land anyhow, Germany if necessary, but silver or bimetallism 
 for as much as possible of the rest of the world. While that 
 answered the purposes of a policy, it did not prevent an accu- 
 mulation of embarrassments. The business world became 
 aware that a depression of trade had set in; manufacturing 
 drooped; the demand for money, of course, fell off, but, instead 
 of the discount rates falling, as would be naturally expected, 
 they were kept artificially high for the protection of the re- 
 serves. A bimetallic sentiment began to grow and flourish 
 among the commercial men of centres like Liverpool and Man- 
 chester, while the government began to be importuned with 
 complaints from India. Whereas, for twenty years before 
 1873, the proportion of conversion had been 10 rupees to the 
 pound sterling, in 1876 it required 11.3 rupees to make a
 
 ANXIETY IN ENGLAND 147 
 
 pound. This necessitated taking 10 per cent, more money out 
 of the Indian nation to pay the same foreign obligation. 
 
 A writer in the Westminster Review in January, 1876, 
 speaking of the demonetization of silver, said that one of the 
 things involved was the probable appreciation of gold, and, 
 unless fresh discoveries were made, debts contracted in gold 
 would tend to press more heavily on the borrowers, and that 
 it would be well if this pressure did not become so intolerable 
 as to suggest by way of solution something like universal repu- 
 diation. Writing upon the same subject, the president of the 
 Liverpool Chamber of Commerce said : " It will practically 
 beggar all nations that have borrowed in silver and have to 
 pay in gold. Money values would fall greatly; national debts 
 like our own would press much more heavily, and a period of 
 suffering and contraction of business would ensue, similar to 
 what the United States has experienced on coming painfully 
 back from inflated paper towards specie payments. Xo doubt, 
 at last the process would be accomplished, and after a century 
 or so the world could trade as well on gold alone as gold and 
 silver combined. But why have the intermediate chaos if it 
 can be avoided?" 
 
 But the government was less concerned about the woes of 
 debtors, English financiers being large creditors, than it was 
 about the increasing difficulties of its trade with India. The 
 variations in exchange had already made trade with that col- 
 ony so much of a gamble that its volume was affected by the 
 uncertainty of profits, and as the Indian government was seri- 
 ously discussing the feasibility of suspending silver coinage, 
 the consequence of which must be a further depreciation of 
 silver, the commercial world was either uncertain or fearful 
 as to the future. 
 
 In July, 1876, the Bengal Chamber of Commerce passed 
 resolutions advocating the suspension of silver coinage, and the 
 issue of notes against silver bullion, on the ground that it
 
 148 AWAKENING IN THE UNITED STATES 
 
 was a necessary precaution for the government to take for the 
 preservation of the country's currency, and to prevent the 
 flood of silver from foreign nations. It was represented that 
 these measures were no more stringent than the first financiers 
 of Europe had found it necessary to adopt. A memorial was 
 made to the government, and in this the Calcutta Trades As- 
 sociation joined. But for the time being the government sim- 
 ply urged the necessity of the utmost economy of the public 
 resources. 
 
 Meanwhile the English Parliament had felt compelled to 
 consider the subject, and a Select Committee on the Deprecia- 
 tion of Silver was appointed in March. It made an extensive 
 investigation and reported in July. Ko remedial measures 
 were suggested, as the committee had been authorized simply 
 to examine into the causes of the fall of silver, and to describe 
 the effect upon Anglo-Indian exchange. The report declared 
 that the depreciation had at least four causes: the German 
 cause, the demonetization of silver in that country; the French 
 cause, the limitation of silver coinage by the Latin Union ; 
 the American cause, the increased production of the mines; 
 and the Indian cause, the falling off of the demands for coin 
 from India. The committee was inclined to minimize the 
 German cause in its effects on the future, believing that Ger- 
 many would still require a large amount of silver, owing to the 
 smaller use of checks and to the habit of daily payment for all 
 family expenses. The limitation or eventful suspension of 
 silver coinage by the states of the Latin Union was regarded as 
 more serious. It could not find sufficient reason for the marked 
 depreciation in the increase of production, saying: " Notwith- 
 standing the late rise in the production of silver as compared 
 with gold, its proportion to gold is still considerably below 
 what it was in 1848, to say nothing of the period when the 
 proportion was 3 to 1; and the conclusion seems justified that 
 a review of the relations of the metals in times past shows that
 
 REPORT OF ENGLISH SILVER COMMISSION 149 
 
 the fall in the price of silver is not due to any excessive pro- 
 duction as compared with gold." 
 
 Much more was made of the effect of the marked increase 
 in the sale of council bills at London. It was pointed out that 
 " the supply of a different form of remittance namely, 
 government bills has superseded to a great extent the ne- 
 cessity of remitting bullion; . . . the effect of this substitu- 
 tion has to be measured in very large figures It will 
 
 be seen that, though the total amount of treasure and bills to- 
 gether remitted to India during the last four years (1872-76) 
 has but slightly declined, the proportion between the two 
 has been entirely reversed." After naming 15,000,000 as 
 the then average sum of the home charges due from the Indian 
 government, the report remarks : " This is the sum which 
 has to be paid annually by India (on state account) to England, 
 and this sum, pro tanto, displaces the dispatch of bullion." The 
 statistics given in the report show that, whereas, in the four 
 years ending 1872, the annual average sales of council bills 
 had been only 7,000,000 while the import of treasure into 
 India had been ten millions per annum, in the four years end- 
 ing 1876 the sales of council bills had been increased to an aver- 
 age of 12,600,000, and the imports of treasure, chiefly silver, 
 had declined to 4,100,000 yearly, or less than one-half. This 
 displacement of silver, therefore, by the London sales of coun- 
 cil bills, must have exerted a much greater effect on the mar- 
 ket at first than the German sales of silver, the greater part 
 of which did not take place till 1877, when the average price 
 of silver was Iff/, above that of 1876, and 2t7. above that of 
 1878. The German sales from 1873 to 1880 amounted to 
 about 27,000,000, or an annual average of only about 3,- 
 400,000. 
 
 The cessation gradually, from about 1868 to 1874, of the 
 sterling sums paid by the great guaranteed railway companies 
 into the treasury of the India office, was, no doubt, responsible
 
 150 AWAKENING IN THE UNITED STATES 
 
 in a large degree for the increase in council bills, for they had 
 been a set-off to the home charges. There was no evidence that 
 India had become overstocked with silver, and the committee 
 said in its report that the use of silver was likely to extend, 
 " not so much by the use of more silver in the territories al- 
 ready occupied by the existing currency as by the gradual in- 
 crease of its use in the remoter parts of India." 
 
 When the report of the British Committee had been con- 
 sidered by the Indian government, it published a response to 
 the appeals of the Bengal Chamber of Commerce and the 
 Calcutta Trades Association, in which it asserted that it could 
 not yet be decisively proved that the divergence of the two 
 metals was due wholly, or even chiefly, to a fall in the value 
 of silver, for the ruling prices of commodities and of the 
 precious metals in London and in India witnessed to a con- 
 siderable rise in the value of the yellow metal after 1873, 
 and especially after 1875, and did not show any fall in the 
 value of silver measured in commodities other than gold. The 
 government, therefore, declared that " to suspend the free coin- 
 age of legal-tender metallic money, as advocated by the Ben- 
 gal Chamber of Commerce, would give a monopoly value to 
 the existing stock of rupees and so reduce prices; whereas 
 prices are not yet risen." The government, for these reasons, 
 rejected as inadmissible the closing of the mints to silver with- 
 out at the same time opening them to the free coinage of gold, 
 and said there was nothing in existing conditions to demand re- 
 course to a measure so costly. Such was the situation at the 
 end of 1876. 
 
 "With this general survey of the morietary conditions in 
 Europe, and in India up to the beginning of the year 1877, 
 we must now return to a consideration of affairs in the United 
 States after the passage of the Mint Act of 1873. An entirely 
 different order of events was taking place on this side of the 
 water. For over ten years the people had known no currency
 
 THE GREENBACK PARTY 151 
 
 but the paper promises of the government to pay, and no peo- 
 ple, no matter how highly civilized, can transact their business 
 affairs on such a basis for that length of time without injuri- 
 ously affecting their appreciation and understanding of the 
 principles underlying good money. 
 
 One of the natural outcomes of the conditions of this period 
 in the United States was the appearance of the Greenback 
 Party. History seems to show that similar movements follow 
 every long season of currency inflation soon after the remedy 
 of contraction is applied and the consequent depression in 
 business sets in. Possibly it is more marked under the political 
 conditions of a liberal form of government. The party out of 
 power, with what is termed " political sagacity," seizes the 
 opportunity to charge the party in power with responsibility 
 for all the woes of the people, and claims that what has been 
 done will be undone, and what has not been done will be 
 quickly accomplished, if only the dear people will turn the 
 " incapables " out of office. The party in power, if it finds 
 public opposition developing through the clamor of its op- 
 ponents, will with equal sagacity create from existing condi- 
 tions an issue, or a measure designed to counteract or " head 
 off " that which its opponents have raised. This unsettled 
 state of things furnishes the opportunity, which is usually em- 
 braced, for the establishment of a new party, going to radical 
 extremes, and depending on the passion of the hour to make 
 it a success. Thus the exact character of the issues adopted 
 and the party policy created are often determined, more with 
 a view to their possibilities as " vote getters " than as solutions 
 of financial or industrial problems, though in the end the peo- 
 ple are sure to find their true course. 
 
 Every Republican administration, from the close of the 
 war, had kept in mind the speedy resumption of specie pay- 
 ments, and had used its best efforts accordingly. With this 
 in view, it had been the policy of the Treasury Department to
 
 152 AWAKENING IN THE UNITED STATES 
 
 contract the paper currency as rapidly as possible without dis- 
 turbance to business. To this policy a large class began to at- 
 tribute the financial panic of 1873 and the ensuing period of 
 depression, when the true cause was the inevitable collapse that 
 must come sooner or later from such prolonged currency infla- 
 tion. Thus the Greenback Party arose, and in many states 
 the Democrats, who had had no abiding governmental policy 
 since the war, quickly adopted the issue in the hope, probably, 
 of gaining strength. The question of the day was greenbacks 
 or gold nothing else, so far as money was concerned. Even 
 as late as the spring of 1876, the party platforms gave no in- 
 dications of the approaching " realization " of the silver de- 
 monetization. That sudden awakening will have to be set 
 down as one of the events that did not cast its significant 
 shadow before. The financial plank of the National Repub- 
 lican convention of 1876 spoke only of the redemption of the 
 national obligations in coin, and the Democratic platform de- 
 nounced " the financial imbecility and immorality of that 
 party, which during eleven years of peace " had made no ad- 
 vance towards resumption, and it denounced the resumption 
 clause of the act of 1875 as only a hinderance to resumption. 
 The Greenback Party denounced both of the others, demanded 
 the immediate repeal of the resumption act, and insisted on 
 the continued issue of government notes. None of these plat- 
 forms contained a word about silver, its relation to gold, or 
 its place in the currency, although Europe had been discussing 
 the question for eight years, and had been agitated over it for 
 three or four. 
 
 History does not record, so far as I have been able to ob- 
 serve, just who in the United States " discovered " that silver 
 had been demonetized in 1873. Though the fact that the 
 old standard silver dollar had been dropped was quite gener- 
 ally realized, the possible seriousness of it did not, evidently, 
 suggest itself to any one for some time, for, as we have seen,
 
 SILVER PRODUCERS FOR GOLD IN 1874 153 
 
 it did not appear in the platforms of 1876, and it was a year 
 later when the first certificate of a doubtful character was 
 given to it, still later when it really obtained the political rank 
 of a crime. The bill for the resumption of specie payments 
 brought financial questions to the front in 1874, but it seems 
 certain that no one in Congress then had any disturbing 
 thought regarding silver or its condition under the laws 
 not even the men interested in silver mines. In a speech in the 
 Senate, April 1, 1874, Senator John P. Jones, of Nevada, in 
 a strong argument for resumption of specie payments, said : 
 
 " Does this Congress mean now to leave entirely out of view and 
 discard forever a standard of value? Did any country ever accumu- 
 late wealth and achieve greatness or attain a high civilization with- 
 out such a standard? And what but gold can be that standard? 
 What other thing on earth possesses the requisite qualities? Gold 
 is the articulation of commerce. It is the most potent agent of 
 civilization. It is gold that has lifted the nations from barbarism. 
 So exact a measure is it of human effort, that when it is exclusively 
 used as a money it teaches the very habit of honesty. It neither 
 deals in nor tolerates false pretence. It cannot lie. It keeps its 
 promises to rich and poor Jilike." 
 
 Does it seem probable that in thus speaking of gold Sena- 
 tor Jones was referring also to silver ? Is it not clear that he 
 used the word as it had been used for a generation, considering 
 gold as the ideal standard, and having no other conception of 
 silver coins than as subsidiary money? Senator Stewart of 
 the same state, in February of the same year, said in the 
 Senate : " I want the standard gold, and no paper money not 
 redeemable in gold ; no paper money the value of which is not 
 ascertained; no paper money that will organize a gold board 
 to speculate in it." On another occasion during the same 
 month he said in a speech : " By this process we shall come 
 to a specie basis, and when the laboring man receives a dollar 
 it will have the purchasing power of a dollar, and he will not 
 be called upon to do what is impossible for him or the pro- 
 ducing classes to do, figure upon the exchanges, figure upon 
 the fluctuations, figure upon the gambling in ISTew York, but
 
 154 AWAKENING IN THE UNITED STATES 
 
 he will know what his money is worth. Everybody knows 
 what a dollar in gold is worth." 
 
 Could Senator Stewart have said this of silver at that time '{ 
 In explaining this utterance in the Senate nearly twenty years 
 later, he said: 
 
 " It was of no consequence whether or not I knew, in February, 
 
 1874, that silver was demonetized in February, 1873. It was too 
 late to prevent what had been done in the previous year. My posi- 
 tion at that time, as well as my knowledge, were entirely immaterial 
 and irrelevant to the discussion. I did not know that silver was de- 
 monetized for more than a year after 1874, since which time my bitter- 
 est enemies will hardly blame me for not doing all in my power in 
 and out of Congress to remonetize silver. . . . The use of the 
 term gold for specie was inaccurate, but it was the common practice 
 at that time." 
 
 This really amounts to additional evidence that at that 
 time, as for twenty years previous, silver was generally re- 
 garded as having a subsidiary place in the currency system of 
 the country. " It was the common practice at that time " to 
 use the word gold for specie. The statement further shows 
 that not until the year 1876 did Senator Stewart "know'' 
 that silver had been demonetized. As he probably became 
 conscious of the fact nearly as early as any one, we are 
 thus enabled to fix the date with sufficient accuracy. It is diffi- 
 cult to understand how, in view of all the circumstances we 
 have enumerated, the absence of any legal provision for the 
 coinage of a standard silver dollar could have escaped atten- 
 tion if there had been any reason in the mind of any one for 
 deploring the omission. The resumption act, which was so ex- 
 tensively discussed in 1874, and was approved January 14, 
 
 1875, plainly implied the single gold standard. The second 
 section repealed the charge for converting gold bullion into 
 coin, but nothing was said about silver, except in the provision 
 authorizing the Secretary of the Treasury to issue small silver 
 coins for the redemption of fractional paper currency. The 
 Forty-third Congress adjourned shortly after the approval of 
 this act, and at some time between this and the assembling of
 
 DEMONETIZATION "DISCOVERED" IN CONGRESS 155 
 
 the Forty-fourth Congress, in December, 1875, it dawned upon 
 some one, but in a mild way, that the dollar of the " fathers," 
 which, to be historically accurate, must be further defined as 
 the dollar which very few of the fathers ever saw, had been 
 legislated out of an existence which, in practice, it had never 
 maintained. It was during this year that the trade dollar, 
 which, with the increased coinage of fractional coins, had more 
 than absorbed the increase in the silver production of this 
 country, became worth less than its face value, and, as in 
 practice it was found that in most Chinese ports the suspicious 
 merchants received coins as ingots, according to their weight 
 and fineness, it naturally began to have a less value in com- 
 merce, and also a less value for the silver producer, a fact that 
 the latter was, it may be presumed, not slow in discovering, 
 particularly when the general suspension of silver coinage in 
 Europe had deprived him of any outlet for his surplus silver. 
 In this situation the absence of the right to take silver to the 
 mints of the United States and have it coined at the ratio of 
 16 to 1 became for the first time embarrassing to the silver 
 producer, and the fact that silver was demonetized in 1873 
 was soon thereafter " discovered." This was in no way dis- 
 creditable to the silver producer. It was simply natural. Bi- 
 metallism could not appeal strongly to him so long as the gov- 
 ernment stamped silver for less than it was worth, nor did it 
 appeal to him seriously in this country when, owing to a fur- 
 ther decline, the mints began to stamp it for more than it was 
 worth. It was not till his silver became more depreciated as 
 to gold than was the government paper that the advantages 
 of bimetallism were strongly revealed to him. 
 
 But the pregnancy of the " discovery " did not at once im- 
 press the Congressional mind. There was nothing to show 
 when Congress assembled in December, 1875, that there had 
 been any change in the attitude towards silver. Much of the 
 report of the Secretary of the Treasury was devoted to a dis-
 
 156 AWAKENING IN THE UNITED STATES 
 
 cussion of resumption and the resumption act, and, in speak- 
 ing of the redemption of United States notes, he invariably 
 used the word gold, whereas the act speaks of redemption in 
 coin. He spoke of the difficulty of accumulating gold with- 
 out meeting opposition from the financial powers, but no one 
 suggested that it would be easier to redeem in silver. Regard- 
 ing this metal the Secretary said: 
 
 " The diminished use of silver coin in various European countries 
 and the increasing production of our silver mines would appear to 
 render the present a very favorable time for procuring supplies of 
 bullion for the manufacture of silver coin, to be used in the redemp- 
 tion of the fractional currency. . . . Since the passage of the act, 
 8,242,642 ounces of silver bullion have been purchased at an average 
 price of lll T 4 ff cents per standard ounce. The mints have been 
 put into active operation, and the aggregate amount of silver coin 
 now in the treasury is $10,000,000." 
 
 The subsidiary character given to silver by such declara- 
 tions awakened no protests apparently. Silver coin could not 
 yet circulate extensively, for the depreciation of the paper 
 currency was still enough greater to drive silver coins either 
 out of the country or into the melting-pot. But early in 1876 
 the revelation that there was no American legal-tender dollar 
 in silver burst suddenly upon an astonished Congress. Ap- 
 parently the appearance of Gabriel would have been less a sur- 
 prise, for the pious mothers of many of the members had 
 brought them up in the constant expectancy of such an eA^ent ; 
 but no prophet had written in plain English that Congress 
 would discover in 1876 what it accomplished after so much 
 discussion in 1873. 
 
 A bill had been introduced, one provision of which would 
 deprive the trade dollar of its legal-tender function for 
 amounts up to $5. In the course of a discussion, Senator Bogy, 
 of Missouri, called attention to the fact that, if the legal-tender 
 function of this trade coin were taken away, there would be 
 no silver dollar of any legal tender. Senator Conkling, of ISTew 
 York, who had held a seat in the Senate when the act of 1873
 
 EXPLANATIONS OP CONGRESSMEN 157 
 
 was passed, in apparent surprise inquired : " Is it true that 
 there is now by law no American dollar? And, if so, 
 is it true that the effect of this bill is to be to make half-dollars 
 and quarter-dollars the only silver coin which can be used as 
 legal tender?" 
 
 Senator Sherman replied that the use of the silver dollar 
 had been discontinued in 1853. Senator Bogy said that the 
 power to issue them existed till 1873, " but since 1873, I 
 think/' he said, " there has been no power." Senator Jones 
 further explained that the privilege was taken away in 1873, 
 " but it needed no law to prevent people from coining such a 
 dollar for use in business, when there was another dollar to be 
 got 3 or 4 per cent, cheaper." The revelation did not at first 
 attract public attention, was considered of too little impor- 
 tance to be given a place in the national platforms of the year; 
 but during the presidential campaign it became a covenient 
 " object lesson " in the arguments of Greenbackers, and when 
 the people once took hold of the fact it spread like wildfire. 
 They wondered whether it had been in any way responsible 
 for producing the panic of IS 73 and the subsequent depres- 
 sion, and then began to believe that it had. Inflationists 
 classed it as another scheme for contraction. Senators and 
 Congressmen, observing the wave of popular feeling, hastened 
 to explain that they had no idea the bill dropped the silver dol- 
 lar when they voted for it. (We are anticipating a little here, 
 for it should be understood that these explanations were not 
 made at once, there being no political necessity for them till 
 1877. They were made mostly in 1878, when the issue had 
 become dangerous in political conventions, and they are in- 
 troduced at this point for the purpose of indicating the 
 mild character of the first effects of the revelation, and we 
 may as well close here one of the most remarkable incidents 
 in the political history of the country.) William D. Kelley, of 
 Pennsylvania, who, in the course of the long history of the bill
 
 158 AWAKENING IN THE UNITED STATES 
 
 in Congress, had twice introduced it with the provision omit- 
 ting the silver dollar, and denying the right of any other sil- 
 ver coinage but that specified in the act, who had said 
 that his committee had been over the measure line by line and 
 word by word, and who ably and distinctly argued for a sin- 
 gle standard of gold, said in his confession or explanation : " In 
 all the legislation of this country there is no mystery equal to 
 the demonetization of the standard silver dollar of the United 
 States. I have never found a man who could tell just how it 
 came about, or why." 1 
 
 This was after the Republicans of Pennsylvania had in 
 state convention demanded the remonetization of silver with 
 free coinage. Many other Republicans, including the most 
 distinguished men at Washington, made the most humble con- 
 fessions of their ignorance of the measure when they voted for 
 it, and the Democrats, who w^ere fully as responsible for its 
 passage as the Republicans, first confessed, and then tried to 
 justify themselves by calling the act " a colossal swindle." 
 This made it politically necessary to find the swindlers. The 
 records were industriously searched for circumstantial evi- 
 dence, and, among other things, it was quickly discovered that 
 Senator Sherman was in Paris just previous to the Monetary 
 Conference of 1867, had advised Commissioner Ruggles, as 
 has already been related, and had been the promoter of the 
 bill in the Senate. So Sherman became a convenient object of 
 suspicion. It was also discovered that the chief advocate of 
 the bill in the House had stated in debate that Ernest Seyd, of 
 London, had examined it and made many valuable sugges- 
 tions. This was in time expanded so that Seyd, who for years 
 had been as earnest an advocate of bimetallism in England as 
 Cernuschi had been in France and Laveleye in Belgium, and 
 who had by letter distinctly warned the committee in charge 
 
 1 Compare with Kelley's remarks in 1872. See page 120.
 
 FIRST CROP OF SILVER BILLS 159 
 
 of the measure against dropping the dollar, was, by misquota- 
 tion from the Congressional Record, made to appear as being 
 in this country while the measure was pending as the agent 
 of a syndicate of foreign bondholders, and with a big corrup- 
 tion fund to secure the adoption of the gold standard. It is 
 unnecessary to enter into the final elaborations of this fiction, 
 made after Seyd's death, and of other fictions equally charac- 
 teristic of the unfortunate career of the Silver Question in this 
 country. The claims for the metal from a monetary stand- 
 point deserved honest treatment, but they could have received 
 no worse from its bitterest enemies than they suffered through 
 the indiscretion of those who suddenly became its friends after 
 the producers of the Pacific slope, who for years had declined 
 to take their product to the mints and had been advocates of 
 the gold standard, discovered that, at the time when it would 
 be highly convenient and profitable to have it coined at the 
 mints at the rate of $1.29 an ounce, it wasn't coined at all, 
 except on government account, and after the congressional 
 constituencies of nearly every state west of the Alleghanies 
 began to demand what they called the traditional double 
 standard of the American people. There is no mystery about 
 the act of 1873 if its history is read aright and from the be- 
 ginning. With the facts that have been given, further rea- 
 sons for the remarkable change in the opinions of the legisla- 
 tors of that time may be left to the psychologists. 
 
 Returning now to the first days of the Forty-fourth Con- 
 gress, it is observed that the discovery of the demonetization of 
 silver was followed by a large crop of silver bills. In March, 
 Senator Reagan, of Texas, brought in a measure to raise the 
 legal-tender privilege of silver dollars to $50. In April, Sena- 
 tor Sherman reported it from the Finance Committee, amended 
 ?o as to provide for coinage of silver dollars of 412.8 grains 
 legal tender up to $20. This made the ratio exactly 16 to 1, 
 instead of 15.98 to 1. Senator Bogy moved to strike out the
 
 160 AWAKENING IN THE UNITED STATES 
 
 amendment, and spoke for the unlimited legal tender and coin- 
 age of both metals at the old ratio. He was followed by Sena- 
 tor Jones, who meanwhile had been making an extensive study 
 of the subject, and acquiring a knowledge of what had been 
 going on for years in Europe. His speech was the real begin- 
 ning of the silver discussion in Congress, and of that higher 
 type which has since been exceedingly rare. It was he who 
 first suggested in this country an international conference to 
 secure a bimetallic agreement. But he evidently did not ap- 
 preciate the situation in Europe, probably giving too much 
 weight to the zealous bimetallists and too little to the real 
 sentiments of the different governments. He said : 
 
 " It would be desirable for all nations to adopt permanently the 
 same standard of value, and if the same were, as in my opinion it 
 no doubt would be, the double standar^l, to adopt the same 
 relation between the metals. To effect this object all that is neces- 
 sary is an international-standard convention, which can be called by 
 any one of the great powers, and should be called by the United 
 States. Provision should be made that no other projects but the 
 standard and ratio should be determined upon, and that the nations 
 should vote according to population or wealth, or on a mixed basis 
 consisting of both. For such an international convention to be 
 called by the United States there is imminent necessity. I regard 
 this project as likely to lead to results of the highest importance. 
 It may be the forerunner of that federation of the nations of which 
 poets have dreamed and bards have sung." 
 
 Free-coinage amendments were offered in the House, and 
 passed by a majority of two to one. In July, William D. Kel- 
 ley, who had quickly become a free-silver man, introduced a 
 bill for the unlimited coinage of the old standard dollar, and 
 the restoration of its legal tender, and asked for its immediate 
 passage under a suspension of the rules, but it failed to receive 
 the two-thirds vote necessary, although it was 119 to G6. A 
 few days later, Bland, of Missouri, made another effort with 
 a similar bill, but it again failed, as did several other attempts. 
 A bill was passed, however, depriving the trade dollar of its 
 legal-tender quality, and authorizing the Secretary of the 
 Treasury to coin silver change to exchange for legal-tender
 
 THE SILVER COMMISSION OF 1870 161 
 
 notes, which were to be reissued only in exchange for fractional 
 paper currency, to be thereupon destroyed. As a result of 
 the discussion and the failure to pass any measure for the free 
 coinage of silver, a resolution was passed on the last day of 
 the session providing for a commission, to consist of three sen- 
 ators to be appointed by the Senate, three members of the 
 House to be appointed by the Speaker, and not exceeding 
 three experts to be selected by and associated with them, whose 
 duty it should be to inquire : 
 
 " (1) Into the change which has taken place in the relative value 
 of gold and silver ; the causes thereof, whether permanent or other- 
 wise ; the effects thereof upon trade, commerce, finance, and the pro- 
 ductive interests of the country and upon the standard of value in 
 this and foreign countries. 
 
 " (2) Into the policy of the restoration of the double standard in 
 this country ; and. if restored, Avhat the legal relation between the 
 two coins should be. 
 
 " (3) Into the policy of continuing legal-tender notes concurrently 
 with 'the metallic standards, and the effect thereof upon the labor, 
 industries, and wealth of the country ; and 
 
 "(4) Into the best means for providing for facilitating the re- 
 sumption of specie payments." 
 
 The further this event recedes into the past, and the less, 
 therefore, we can appreciate the conditions then prevailing, 
 the more unique will it appear as a feature of monetary his- 
 tory. Here was the legislature of a great nation, which, for 
 various reasons, had had but little metallic currency for forty 
 years, and w r hich had been compelled to refuse specie pay- 
 ments for fifteen years, which from 1835 to 1873 had scarcely 
 seen a standard silver dollar of its own mintage, and which, in 
 the two years following the demonetization of silver by law in 
 1873, had coined more silver dollars than had been coined for 
 eighty years before 1873, solemnly inquiring into the effects 
 upon its trade, commerce, and productive interests of a change 
 in the relative value of silver to gold, into the policy of restor- 
 ing that which in practice had not existed for years, and at 
 a time when all the other great nations of the earth were dis- 
 carding it. England, with her gold standard, had in circulation, 
 11
 
 162 AWAKENING IN THE UNITED STATES 
 
 probably, ten times more silver than could be found in all 
 the old stockings of the American people at that time, to say 
 nothing of the enormous silver currency of her colonies. Eng- 
 land had reason to be concerned over the change in the rela- 
 tive value of the two metals, and so had Germany, with over a 
 hundred million dollars' worth of old thalers of full legal ten- 
 der, and so had France, with the largest stock of legal-tender 
 silver in the world, outside of India. But the United States had 
 not even a circulation of fractional silver, and dared not put 
 it out unless paper was surrendered for it. The first practical 
 question in this country was resumption; so far as a change in 
 the relative value of gold and silver bore on that subject, an in- 
 quiry was practical. The usefulness of the commission de- 
 pended on the light it should furnish for the determination 
 of the policy of the future, in anticipation of the resumption 
 of specie payments, and not upon the trade and commerce of 
 the past, under an irredeemable paper regime. Had not steps 
 for resumption been already taken, and the future course 
 definitely marked out, the work of the commission would have 
 had simply theoretical value; but under the circumstances it 
 proved of great practicability, and the report proved to be 
 one of the most valuable compendiums of monetary facts that 
 had been published up to that time. 
 
 The commission, as appointed, consisted of Senators Jones 
 of Nevada, Bogy of Missouri, and Boutwell of Massachusetts, 
 Congressmen Gibson of Louisiana, Willard of Michigan, and 
 Bland of Missouri, and, for experts, William S. Groesbeck of 
 Ohio, and Prof. Francis Bowen of Harvard University. It did 
 its work thoroughly and collected vast stores of information 
 from the best sources in this country and in Europe. Briefly 
 stated, the conclusions of the majority, according to the report, 
 which, it has been asserted, was written by Senator Jones, were 
 that the production of silver relatively to gold had not been 
 greater than formerly, that the fall in the price had not been
 
 THE MAJORITY REPORT 163 
 
 caused by any large production, but mainly by concurrent de- 
 monetization of silver in Germany, the United States, and the 
 Scandinavian states, the closure of the mints of Europe to its 
 coinage, the temporary diminution of the Asiatic demand, the 
 exaggeration of the actual and prospective yield in the Nevada 
 silver mines, and a prevailing idea that the efforts of the hold- 
 ers of government securities would bring about its demoneti- 
 zation; that gold is more fitful in production than silver; that 
 the average production of both is more steady than that of 
 either one ; that, to annihilate the money function of one must 
 greatly increase the purchasing power of the other and greatly 
 reduce prices ; that silver to the amount of three billion dollars 
 in coin, the accumulation of fifty centuries, was so worked 
 into the web and woof of the world's commerce that it could 
 not be discarded without entailing the most serious conse- 
 quences, social, industrial, political, and commercial; that the 
 evil was enormously aggravated by the selection of gold as the 
 metal to be retained, and silver as the metal to be rejected; 
 that the exchanges of the world and especially of this country 
 were continually and largely increasing, while the supplies of 
 both the precious metals taken together, if not diminishing, 
 were at least stationary, and the supply of gold taken by itself 
 was falling off; and that to submit the vast and increasing ex- 
 changes of this country and of the world to be measured by a 
 metal never to be depended upon in its supply, and then ac- 
 tually diminishing, would make crisis chronic and business 
 paralysis perpetual. The majority also recommended the 
 restoration of the double standard, and the unrestricted coin- 
 age of both metals, as not simply the best, but the essential 
 means for the resumption of specie payments. In its opinion, 
 moreover, the remonetization of silver in this country would 
 have a powerful influence in preventing, and probably would 
 prevent, the demonetization of silver in France and other 
 European countries, and, even without change in legislation
 
 164 AWAKENING IN THE UNITED STATES 
 
 abroad, would draw to this country silver from other countries, 
 while cheap, in exchange for exports, so that this country 
 would have the benefit in the rise in value which, it was be- 
 lieved, would take place when the temporary causes of its de- 
 pression had passed. The facts that Germany and the Scandi- 
 navian states had adopted the gold standard, and that some 
 other European nations might possibly adopt it, instead of 
 being reasons for perseverance in the attempt to establish it 
 in the United States, were precisely the facts, the majority 
 held, which made such an attempt entirely impracticable and 
 ruinous, for the attainment of such a standard became difficult 
 precisely in proportion to the number and importance of the 
 countries engaged in striving for it; and in precisely the same 
 proportion would the ruinous effects of striving after it be 
 aggravated. " To propose," said this majority, " to this coun- 
 try a contest for the gold standard with the European nations 
 is to propose to it a disastrous race, in reducing the price of 
 commodities and of labor, in aggravating the burdens of debt, 
 and in the diminution and concentration of wealth in which 
 all the contestants would suffer immeasurably and the victors 
 even more than the vanquished." Such were the conclusions 
 of Senators Jones and Bogy and of Congressmen Willard and 
 Bland, and of Groesbeck, the expert. Senator Boutwell made 
 a minority report against the remonetization of silver except 
 upon a previously agreed basis, adopted in conjunction with 
 European nations, and he considered it expedient to extend an 
 invitation to the commercial nations of the world to join in 
 a convention for the purpose of considering the wisdom of 
 providing by treaties concurrent legislation for the use of both 
 silver and gold upon a fixed relative valuation. He maintained 
 the uselessness of inquiring into the causes of the variations of 
 the two metals when, so long as gold was generally accepted 
 as the standard of value even in countries where silver was 
 endowed with the legal-tender quality, the relation which
 
 SENATOR BOUT WELL DISSENTS 163 
 
 other articles, including silver, bear to gold was one of fact, 
 and all theories regarding values must conform to it; that 
 human experience had shown that no country had been able 
 to maintain two standards of value in actual use at the same 
 time; that if the United States remonetized. silver without re- 
 gard to the policy of other countries, the discarded silver of 
 those countries would flow to this country, and it would stead- 
 ily decrease in value ; that it would not be useful in the redemp- 
 tion of our paper currency, as it would not answer for the 
 purpose of liquidating foreign balances; that the adoption of 
 silver as a standard would be followed by a loss in the depre- 
 ciation of the public credit far greater than any gain to the 
 government by the payment of the interest and principal of 
 the public debt in a coin less valuable than gold; that, however, 
 it would be wise if the nations could agree to the use of both 
 gold and silver as a standard, as the annual product of the two 
 metals combined appeared to be more uniform than the an- 
 nual product of either, justifying the conclusion that together 
 they would furnish a more unvarying basis for business than 
 either one, render the transaction of business more safe, 
 diminish the danger of revulsions and the suspension of specie 
 payments; but that the remonetization of the white metal by 
 the United States alone would be followed by such a depre- 
 ciation in its value as to furnish a reason against the adoption 
 of the plan by the rest of the world. 
 
 Prof. Eowen, the other expert, also wrote a lengthy dis- 
 senting report, which was concurred in by Congressman Gib- 
 son. Very briefly stated, his conclusions were : 
 
 1. The great changes that have taken place during the last year * 
 in the relative value of the two precious metals are attributable 
 almost entirely to fluctuations in the market price of silver. 
 
 2. These fluctuations prove that silver has become entirely unfit 
 for use as a standard of value. 
 
 3. The so-called double standard is an illusion and an impossi- 
 bility. 
 
 4. The proper place for silver in a monetary system is that of a
 
 166 AWAKENING IN THE UNITED STATES 
 
 subsidiary or token currency which is considerably overvalued by 
 law and made legal tender only within certain limits. 
 
 From this point of view and for the purpose of facilitating 
 the resumption of specie payments, and also of promoting the 
 internationally of gold coinage, Prof. Bowen advocated the 
 following legislative measures: 
 
 " The coinage of dollars, each containing 345.G grains of pure 
 silver, to be legal tender for any sum not exceeding $20, and to be is- 
 sued only in exchange for paper currency below the denomination of 
 five dollars, the one-dollar and two-dollar notes so received to be im- 
 mediately cancelled and destroyed. These silver dollars, however, 
 should be receivable to any amount in payment of any dues to the 
 government, except for duties on imports. 
 
 " Gold should, in future, be coined only at the rate of 22.6 grains 
 of pure gold to the dollar, so that the half-eagle or five-dollar piece 
 may be almost the exact equivalent of one pound sterling, but with 
 the provision that all debts and contracts expressly made payable 
 in gold, and outstanding on the date of such an enactment, should be 
 paid and discharged only by dollars each containing 23.2 grains of 
 pure gold, or by their equivalent. 
 
 " Out of the paper currency received by the government in the col- 
 lection of its internal revenue, a sum not exceeding three millions of 
 dollars each month should not be reissued, but cancelled and de- 
 stroyed, any deficit thereby created in the Treasury being supplied 
 by the sale of any of the bonds already authorized by law." 
 
 In a supplementary note to the report, Senators Jones and 
 Bogy and Congressman AVillard strongly urged that when 
 silver was remonetized in the United States it should be at 
 the ratio of 15.50 to 1, and, to accomplish this, that the weight 
 of the silver dollar be reduced to 399.9 grains. In his testi- 
 mony before the commission, Cermischi, the French bimetal- 
 list, had declared that it would be better for the United States 
 not to remonetize silver at all than at the old ratio of 16 to 1, 
 and these three commissioners in their report said that a legis- 
 lative remonetization of silver at the ratio of 15.50 to 1 would 
 accomplish without delay all the objects of the proposition for 
 an international conference, for, if such a conference resulted 
 in anything, it would be in the agreement of the United States 
 to adopt the European ratio, as it was not expected that 
 Europe could be persuaded by any conference to give up that 
 ratio and adopt the old American one. But Grocsbeck and
 
 QROESBECK AND BLAND OPPOSE THE FRENCH RATIO 167 
 
 Bland could not agree with their associates in this view. The 
 former took the ground that, if it did result in the exportation 
 of silver, it would bring back gold or merchandise, and, in view 
 of the fall of silver, he felt sure that, if the United States and 
 the leading nations of Europe, including the Latin Union, 
 were then assembled in a conference to consider the subject, 
 they would, in view of the prevailing market value of the two 
 metals, prefer 16 to 1 as being more accurate and just. Bland 
 adhered to the old dollar in a note containing this remarkable 
 observation : " I fear we should endanger the success of the 
 movement to remonetize silver in this country should we now 
 attempt to change the relation existing when so many of our 
 debts, public and private, were contracted ; for whatever silver 
 dollar we authorize should in all respects in law be equal to the 
 gold dollar in the discharge of all debts, public and private, 
 past and future." 
 
 As most of the existing debts had been contracted when 
 the United States had neither silver nor gold, it made little 
 difference whether the ratio was slightly changed or not. Mr. 
 Bland was evidently laboring under the delusion, which after- 
 wards became so widespread, that we had had a perfect and un- 
 variable double standard up to 1873, whereas there had been 
 very few days in the entire history of the government when 
 gold and silver dollars were of equal value at prevailing ratios, 
 and it is doubtful if there ever was a time when values were 
 actually measured in terms of silver and gold together. It will 
 be observed from this analysis of the reports that four of the 
 commission were in favor of the remonetization of silver, and 
 three were opposed, while only two favored the restoration of 
 the old dollar. 
 
 The Forty-fourth Congress met for its closing session De- 
 cember 4, 1876, and although the commission was unready to 
 report, Bland at once reported from the Committee on Mines 
 and Mining a substitute for his original bill (which had pro-
 
 168 AWAKENING IN THE UNITED STATES 
 
 vided for the unlimited issue of coin notes based on gold and 
 silver bullion brought to the mints), providing for the unre- 
 stricted coinage of silver dollars of the old weight, and for 
 their full legal tender. The following day, the 13th, the pre- 
 vious question was ordered on the substitute, all amendments 
 were prevented, and after a debate limited to two hours it 
 was passed by a vote of 167 to 53. The Senate referred it to 
 the Finance Committee, and soon afterward, the Silver Com- 
 mission asked for an extension of time for making its report, 
 which was granted. The Finance Committee at once directed 
 its chairman to report the Bland Bill back without recom- 
 mendation, to be placed on the calendar, awaiting the report 
 of the commission before taking the measure up for action. 
 The main part of the commission's report was submitted on 
 March 2, and two days later that Congress adjourned, Mr. 
 Hayes becoming President. 
 
 The silver question was fairly launched, and made its 
 appearance in the political conventions of that year for the first 
 time. The Democrats quite generally adopted the issue, and, 
 conscious of the apparent strength of the Greenback Party, 
 thought to embrace that element by declaring for the unlim- 
 ited issue of notes also. One would think from reading some 
 of the Democratic platforms of 1877 that a large portion of 
 the people were convinced that their happiness depended upon 
 the government working its mints and printing-presses day 
 and night. The Republicans in many sections earnestly 
 adopted the free-silver issue. They were more or less tainted 
 with inflation in the West, and the leaders felt compelled to do 
 something. Indeed, the arguments of the Silver Commission 
 appealed to many thoughtful persons, to whom, undoubtedly, 
 the restoration of the double standard by the United States 
 alone seemed a wise economic step. The perceptions of the 
 people had been blunted by the use of a paper currency, and, 
 while desiring the resumption of specie payments, they could
 
 POLITICAL PLATFORMS OF 1877 169 
 
 not fail to regard silver coin, which had intrinsic value, as bet- 
 ter than depreciated paper. Silver had not yet fallen irre- 
 deemably, and in that year was showing an upward tendency 
 owing to the famine in India. Hence, in 1877, we find the Re- 
 publicans of Iowa making such platform declarations at this: 
 
 " The silver dollar having been the legal unit since the foundation 
 of the federal government until 1873, the law under which its coinage 
 was suspended should be repealed at the earliest possible day, and 
 silver made with gold a legal tender for the payment of all debts, 
 both public and private." 
 
 The Ohio Republicans declared: 
 
 " We are in favor of both silver and gold as money; that both shall 
 be legal tender for the payment of all debts, except those specifically 
 provided for by law, with coinage and valuations so regulated that 
 our people shall not be placed at a disadvantage in our trade with 
 foreign nations, and that both metals shall be kept in circulation as 
 the money of the nation, as contemplated by the Constitution; and 
 we therefore demand the remonetization of silver.": 
 
 The Pennsylvania Republicans expressed their position in 
 this language: 
 
 " The long and successful existence, under the laws of Congress, 
 of the double coin standard warrants us in demanding an early repeal 
 of the legislation which demonetized silver and established an almost 
 exclusive gold standard, and we therefore favor a return to the 
 free use and unrestricted coinage of the dollar of 1798, and its res- 
 toration to the position it held as a legal tender during the eighty 
 years of our national existence, thus preserving the equality of the 
 commercial value of the silver dollar with the gold dollar, keeping 
 both in circulation." 
 
 After such a statement as this we need not be surprised 
 at the narrow limits of the popular understanding of the mone- 
 tary experience of the nation prevailing in that period of de- 
 preciated paper. The common thing in the Democratic plat- 
 forms of that year was the denunciation of the demonetization 
 of silver as a " Republican outrage," and a demand for the 
 retention of the greenbacks. 
 
 i In the recent campaign (1890) for the nomination of a Republican 
 candidate for the Presidency, bitter criticisms were made of Major 
 McKinley by some Democratic papers (afterwards compelled to sup- 
 port him) because he voted in 1877 for a free-silver coinage bill in 
 the House. He was first elected to Congress in the campaign for 
 which this platform was made.
 
 170 AWAKENING IN THE UNITED STATES 
 
 With the responsibility for the resumption of specie pay- 
 ments within a specified time resting on the shoulders of the 
 executive department of the government, it naturally regarded 
 with much concern the growing movement for the restoration 
 of silver while European nations were discarding it. In his 
 last message to the Forty-fourth Congress, Lot M. Morrill, 
 Secretary of the Treasury, had argued skilfully that the coin 
 payment to which the faith of the nation was pledged in 18G9 
 was gold, and not silver, and that any other view of it, what- 
 ever technical construction the language of that act might be 
 susceptible of, would be regarded as of doubtful good faith 
 and its probable effect prejudicial to the public credit. He es- 
 timated that the belief that the public obligations were to be 
 paid in gold coin had a practicable value in the probable re- 
 duction of the debt equal to one-fourth of the amount of the 
 annual interest thereon. 
 
 In assuming his duties as Secretary of the Treasury in 
 March, 1877, and thus entering upon the critical period 
 preparatory to resumption, John Sherman found a contract 
 made by his predecessor, Mr. Morrill, with August Belmont & 
 Co., representing N. M. Rothschild & Sons and associates in 
 London, J. & W. Seligman & Co., in behalf of themselves 
 and associates in New York, Drexel, Morgan & Co., represent- 
 ing J. S. Morgan & Co., of London, and Morton, Bliss & Co., 
 representing a New York syndicate, for purchasing bonds for 
 the refunding of the outstanding 6-per-cent. five-twenties, the 
 Treasury Department making regular calls for them for re- 
 demption. These houses had agreed to take and had taken 
 to the extent of $40,000,000, the 44-per-cents. authorized by 
 the acts of 1870 and 1871, while holding the exclusive right to 
 subscribe for all or any portion of the remaining $260,000,000. 
 The act also enabled the Secretary of the Treasury to with- 
 draw the 4|-per-cents. from the market, and substitute thirty- 
 year 4-per-cents. In April, Secretary Sherman wrote to the
 
 DOUBT AS TO REFUNDING BONDS 171 
 
 contractors that he desired to do this when $200,000,000 of 
 the 4^-per-cents. had been sold. By the words of the act all 
 such bonds were " redeemable in coin of the present standard 
 value;" and, as the act was passed in 1870, or before silver 
 was demonetized by law, the silver men held that all bonds 
 could be paid in either gold or silver. The contractors for the 
 purchase of the new securities were not slow in asking Secre- 
 tary Sherman what, in his opinion, the terms of the act meant, 
 and if it would not be better to avoid any misunderstanding by 
 making the bonds payable in gold. The Secretary at once 
 replied that the new bonds would have to conform to the terms 
 of the law, u payable in coin ; but," he added, " they will be 
 of the present date, when only one kind of coin is a legal ten- 
 der for all debts." This meant, of course, that bonds were 
 payable in the standard coin at the time of their issue, and not 
 at the time of the passage of the act. But upon a closer exam- 
 ination of the act it was found that it also specifically said " in 
 coin of the standard value of the United States on said July 14, 
 1870." Other expressions in the act, could, however, be con- 
 strued differently. Whatever the fact was in law, in practice 
 it was that at the time of the enactment it was next to impossi- 
 ble to find an American silver dollar, and the Director of the 
 Mint estimated that not one hundred of them were in exist- 
 ence even in 1876. There is no doubt whatever that the 
 words " standard value " used in the act were understood at 
 that time to mean nothing else than the amount of pure gold 
 found in coin as fixed in 1837. Secretary Sherman applied 
 to the Attorney-General for a ruling, and the latter replied 
 that the meaning obviously was " coin of the standard value 
 at the date of the passage of the act." The inference, there- 
 fore, was that the bonds could be redeemed in silver, but he 
 also said that the provision was intended to guard the holder 
 against any depreciation that might take place in the coin 
 while the government would not be compelled to pay the ad-
 
 172 AWAKENING IN THE UNITED STATES 
 
 ditional value should the coinage be appreciated. This might 
 be made to mean that the bonds could not be redeemed in sil- 
 ver coin depreciated far below the value it had at the date of 
 the act, or it might mean in silver coined at a ratio to gold 
 unlike that prevailing by law in 1870. The uncertainty, there- 
 fore, was hardly removed and the character of the redemption 
 was really left dependent on the good faith of the government. 
 The hesitancy of the investors was not removed. In June, As- 
 sistant Secretary French, of the Treasury Department, sub- 
 mitted to the Secretary an opinion that, if the coinage laws had 
 remained unchanged, bonds could have been redeemed in 
 either gold or silver, but the act of 1873 had practically de- 
 clared that silver should not be a tender for such bonds. All 
 bonds sold after 1873, he said, carried with them the promise 
 to pay in legal coin that is, gold coin and an act then to 
 make them payable in silver also would insert an element not 
 in the contract. He maintained, therefore, that all bonds 
 sold by contract to the syndicate must be paid in gold. 
 
 At this time some leading Republican newspapers were 
 claiming or representing that the President and Secretary 
 Sherman were favorable to silver legislation, a circumstance 
 about which the Secretary complained privately to J. & W. 
 Seligman & Co., who had called his attention to an editorial 
 in the New York Times, regarding the effect of the silver 
 movement on the sale of the bonds, and suggested that while 
 intelligent men knew that the Secretary and the President 
 were " sound on the silver question," it would be, they thought, 
 " highly advantageous to the marketing of the 4-per-cent. 
 bonds to disabuse those who had been led to believe that 
 the President and Secretary favored remonetizing silver with 
 a view of paying the national debt in a metal so fluctuating as 
 silver had become since the principal nations of Europe had 
 demonetized." l About the same time August Belmont wrote 
 
 i Seligman & Co. to Mr. Sherman, June 12, 1877.
 
 SECRETARY SHERMAN'S DIFFICULT POSITION 173 
 
 to the Secretary a long letter earnestly urging him to make 
 an official expression over his own signature. " You are 
 placed at this moment," he wrote, " by a large portion of your 
 political friends, in a somewhat similar position as the late Mr. 
 Chase was by the attempt of Thaddeus Stevens to have Con- 
 gress pass a law to declare the principal of the five-twenty 
 bonds payable in currency. Mr. Chase took the bull by the 
 horns by declaring over his own signature that the principal, as 
 well as interest, of the five-twenty bonds were payable in gold." 
 Belmont called the " silver heresy worse than the inflation her- 
 esy." " The latter," he said, " only proposes to put off the day 
 of payment, while the first actually proposes to pay at a dis- 
 count of 14 per cent, what the government is now borrow- 
 ing (at 4 per cent.) at par." I 
 
 Secretary Sherman was unquestionably in a difficult posi- 
 tion. The resumption of specie payments, the burden of which 
 rested upon the administration, and largely upon his shoulders, 
 was not to be easily accomplished, even imder favorable con- 
 ditions. It depended upon the assured credit of the govern- 
 ment, and those to whom he looked for the marketing of the 
 bonds doubted that credit unless redemption in gold was 
 stipulated over his signature, while Congress, including, ap- 
 parently, a majority of the members of his own party, was 
 preparing to remone.tize silver. Moreover, the Secretary was 
 an executive officer, appointed to carry out the acts of Con- 
 gress, and he hesitated to give occasion for any resentment of 
 a body jealous of its prerogatives, or to give possible material 
 to the silver advocates for argument or play upon popular 
 passions. Yet the bonds must be sold. The people who 
 could buy them asked to be assured of their payment in gold, 
 and the people who couldn't buy them demanded that the gov- 
 ernment pay its obligations in silver, if it wished to. To com- 
 
 i Belmont to Sherman, June 14, 1877.
 
 174 AWAKENING IN THE UNITED STATES 
 
 plicate matters, at just this time the foreign market was dis- 
 turbed by the Russo-Turkish war and the threatened revival 
 of the Eastern Question, and at home a strike on the Balti- 
 more & Ohio Railway system was resulting in violence and 
 destruction. 
 
 Two days after the receipt of Belmont's letter the Secre- 
 tary replied that he had given the suggestion careful con- 
 sideration, and had come to the firm conclusion that it would 
 be inexpedient on his part to make any public statement, which 
 would be calculated to defeat the very object Belmont had in 
 view. " As a purely executive officer," he wrote, " I have no 
 power to pass upon the question mooted. My attempt to do so 
 would at once unite all those who are seized with this mania 
 and those who oppose executive encroachment upon legisla- 
 tive power. It would create excitement, personal and political 
 animosities would mingle with it, and it would tend more 
 than anything else to defeat the success of the loan. I am 
 quite sure this would be the result. As to whether Congress 
 or the people would ever undertake to pay either principal or 
 interest of the bonded debt, and especially the bonds sold 
 since 1873, in silver, I have a firm conviction that the ques- 
 tion will never seriously be raised. These bonds will be 
 paid, principal and interest, in gold coin. The people 
 of the United States have always been extremely sensitive as 
 to the public credit. They never have for the sake of an ap- 
 parent profit yielded any question involving the public honor. 
 . . . Parties or factions may for a time raise and contest 
 questions, but they are but bubbles, and will pass away, and, 
 like all questions involving public credit, will be rightfully 
 settled in due time by Congress and the people. jSTothing 
 would so tend to disturb this result as unauthorized ' theses ' 
 or dogmas by an executive officer upon a question purely legis- 
 lative or judicial. Indeed, it may be that too much has al- 
 readv been said about this matter by both the President
 
 APPREHENSIONS ABROAD 175 
 
 and myself, and I assure you that you will have no occasion 
 tc be disturbed by anything truthfully reported by either of 
 us hereafter. The better way is to move right along, making 
 your own statements, and, if at any time I see a proper occa- 
 sion for a strong expression of my opinion, I will give it." 
 
 The same day that the Secretary penned this the London 
 agent of the Treasury Department wrote to him that English 
 investors were hesitating about taking the bonds because of the 
 rumors that the President and Secretary of State (Mr. Evarts) 
 were both in favor of the restoration and unlimited coinage 
 of silver. " Our credit," he said, " would be absolutely ruined 
 here if silver were to be made a legal tender in any large 
 amount." This letter did not reach the Secretary, of course, 
 for several days, but he apparently had intimations of the 
 feeling in the London market, for two days later, the 18th, he 
 wrote to Belmont that upon mature reflection he did not feel 
 sure that he had been entirely right in the first part of his 
 previous letter, which was based, not upon his conviction as 
 to the question, but upon the probable effect of a public 
 declaration. He did not believe that Congress would ever 
 seriously entertain such a proposition as the payment in silver 
 coin of bonds offered at par in gold. As to himself, it was a 
 proposition so obnoxious that he repelled it almost as an in- 
 sult. " If," he concluded, " those engaged in the sale of these 
 bonds should, upon full reflection, think that I ought to give 
 the weight of my official influence in clearing away an honest 
 doubt, I will do it, but would prefer not to seem by a formal 
 declaration to suggest a belief that I think Congress or the 
 American people would ever resort to such an expedient to 
 make easier the payment of their debts." After a few hours' 
 further reflection the Secretary determined to partially yield 
 to Belmont's request, and a letter received on the 19th from 
 Francis O. French, of !N"ew York, furnished the opportunity. 
 The Secretary's reply was as follows:
 
 176 AWAKENING IN THE UNITED STATES 
 
 "TREASURY DEPARTMENT. 
 Washington, D. C., June 19, 1877. 
 
 " Sir, Your letter of the 18th instant, in which you inquire 
 whether the 4-per-cent. bonds now being sold by the government are 
 payable, principal and interest, in gold coin, is received. The subject, 
 from its great importance, has demanded and received careful con- 
 sideration. 
 
 " Under laws now in force there is no coin issued or issuable in 
 which the principal of the 4-per-cent. bonds is redeemable, or the 
 interest payable, except the gold coins of the United States, of the 
 standard value fixed by laws in force on the 14th of July, 1870, 
 when the bonds were authorized. 
 
 " The government exacts in exchange for these bonds payment at 
 their face in such gold coin, and it is not to be anticipated that any 
 future legislation of Congress or any action of any department of 
 the government would sanction or tolerate the redemption of the 
 principal of these bonds or the payment of the interest thereon in 
 coin of less value than the coin authorized by law at the time of 
 the issue of the bonds, being the coin exacted by the government 
 in exchange for the same. 
 
 " The essential element of good faith in preserving the equality in 
 value between the coinage in which the government receives and 
 that in which it pays these bonds will be sacredly observed by the 
 government and the people of the United States, whatever may be 
 the system of coinage which the general policy of the nation may 
 at any time adopt. 
 
 " This principle is impressed upon the text of the law of July 14, 
 1870, under which the 4-per-cent. bonds are issued, and requires, in 
 the opinion of the executive department of the government, the re- 
 demption of these bonds and the payment of their interest in coin 
 of equal value with that which the government receives from its 
 issue. 
 
 " Very respectfully, 
 
 "JOHN SHERMAN, Secretary. 
 
 " Francis O. French, Esq., 
 
 94 Broadway, New York." 
 
 Copies of this letter were sent to members of the bond syn- 
 dicate with a personal note from the Secretary to the effect 
 that the views therein expressed were concurred in by the 
 President and all his cabinet. It had an immediate effect on 
 the market. The 4 bonds advanced f in gold the next day. 
 There were numerous expressions of approval of the position 
 of the administration, and, whatever its effect upon the silver 
 advocates, it seems probable that it strengthened the natural 
 conservatism of the senators who were watching affairs from 
 their respective homes. For a time after this the refunding 
 operations progressed smoothly and successfully, the Secretary
 
 RESULTS OP THE OCTOBER ELECTIONS 177 
 
 being able to dispose of a large quantity of 4-per-cents. by sub- 
 scription both here and abroad. English investors bought the 
 securities freely, none other having any better standing in 
 the markets of Europe. Their sale was hindered only by the 
 final preparations of France to resume specie payments, while 
 Germany was accumulating all the gold it could in exchange 
 for silver. Meanwhile silver campaigns were being carried 
 on in the Western States, on platforms from which quotations 
 have been made. Writing to the London agent, September 
 22, Secretary Sherman said that the silver question was dis- 
 turbing the market somewhat, and might, if unwisely decided, 
 suspend further sales. " But," he added, " if, as I hope, silver 
 coin will only be authorized in exchange for United States 
 notes, it will help us and not hinder us." The Secretary, as 
 well as other shrewd observers, saw that the sentiment had 
 developed great strength and would surely make itself felt 
 in the coming Congress. 
 
 In October the results of the silver campaigns were re- 
 vealed. The people had contracted the mania. President 
 Hayes had carried Ohio in 1876 by 7500 plurality; in 1877 
 the Democratic candidate for governor was elected by a plu- 
 rality of 22,520 over the Eepublican candidate. Though the 
 Republicans had declared for free silver coinage, the people 
 went over to the Democrats, who declared the Republicans re- 
 sponsible for the demonetization of the metal, and who, besides, 
 demanded the immediate repeal of the Resumption Act and the 
 retention of the greenback currency " as the best paper money 
 we ever had." Coming from their own state, this verdict 
 could not have been very encouraging to the President and 
 the Secretary of the Treasury, whose duty it was under the 
 law to secure gold enough to resume specie payments in fifteen 
 months. In Pennsylvania a treasurer was elected, the Demo- 
 cratic candidate winning by 9900 plurality, although a year 
 before the Republican plurality had been 17,960. The green- 
 12
 
 178 AWAKENING IN THE UNITED STATES 
 
 backers ran a separate ticket, which received 52,850 votes, or 
 nearly 10 per cent, of the whole. In this state also, while the 
 Republicans demanded the repeal of the act demonetizing 
 silver, the Democratic campaign was conducted on more radi- 
 cal principles. The Republicans held Iowa by a reduced plu- 
 rality, the greenback ticket receiving 34,220 votes, or about 
 14 per cent, of the whole number cast. 
 
 The foreign market was much disturbed over the news. 
 The London Times treated the results as a triumph of infla- 
 tionists and silver advocates. England was not disposed to 
 treat our securities very kindly at that time, because, the crops 
 being short in Europe, the indications were that our exports 
 of cereals would cause an extensive balance in our favor and 
 lead to a drain of gold from the Bank of England, which had 
 already suffered in spite of a high discount rate. 
 
 The Forty-fifth Congress, which assembled in special ses- 
 sion October 15, with such expressions of the popular will 
 fresh in mind, consisted, in the Senate, of 39 Republicans, 36 
 Democrats, and David Davis, independent; in the House, of 
 153 Democrats and 140 Republicans. Bland, of Missouri, as- 
 sumed the leadership of the silverites in the House, and, with- 
 out waiting for the regular session to open, introduced a new 
 bill " to authorize the coinage of the standard silver dollar and 
 restore its legal-tender character." The rules were at once 
 suspended, and the bill passed without debate, by a vote of 1G4 
 to 34, the negative votes being almost entirely from Xew York 
 and New England. 
 
 This vote took the financial world by surprise, as it was 
 manifest that the House at least Avould pass a free-silver bill 
 over a veto, even if that obstacle should be interposed. As soon 
 as the news reached ISTew York, Belmont telegraphed to Sher- 
 man that the passage of the bill by the Senate would destroy all 
 chances of refunding and resumption; then he sat down and 
 wrote a long letter to the Secretary, treating the action of the
 
 THE BLAND BILL AND THE BOND SYNDICATE 179 
 
 House, in the most vigorous language, as an effort to violate 
 the nation's faith and honor. 1 While he was writing this 
 Sherman was writing a reply to the telegram. He said: 
 
 " The passage of the silver bill in its present form would, as you 
 say, stop funding and resumption, but I have no expectation that it 
 will pass, except a provision for issuing the silver dollar on govern- 
 ment account in exchange for United States notes. In case it passes 
 and you shall have assented to make the call I ask for, I will 
 promptly assume the payment of the bonds called, for the passage 
 of such a bill might fairly be regarded as a suspension of your con- 
 tract and a practical repeal of the refunding act. We must act upon 
 the laws as they are, and I have a confident hope that they will not 
 be materially changed." 
 
 The same day the president of the First National Bank of 
 New York and a member of the bond syndicate wrote to 
 Sherman that " two gentlemen of prominence and undoubted 
 character," who were not in sympathy with the silver move- 
 ment, had conversed with the President upon the subject 
 within a week, and had left him with the belief that he would 
 sign the Bland measure. There was little hope of its defeat. 
 It was telegraphed to London that it would surely pass, where- 
 upon the Rothschilds requested the Treasury agent there to 
 
 i The following extracts from Mr. Belmont's letter show the feel- 
 ing produced in financial circles by the event: 
 
 " To do such a thing now as is contemplated by the Bland Silver 
 Bill, when the federal finances are in a flourishing condition, when 
 the premium on gold has been reduced 2% and 3 per cent., and when 
 our funded debt sells equal to that of any other public security in the 
 world, is actually as if a man of wealth and position, who had, by a 
 lifelong course of strict honesty, acquired the well-earned confidence 
 and respect of his fellow-citizens and of the outer world, should, in 
 the midst of his affluence and without any palliating excuse of any 
 temptation of want or necessity, commit open theft. 
 
 " When you look back and find in the archives of your depart- 
 ment the proud records of a nation's faith, kept inviolate with a most 
 punctilious and chivalrous spirit during a century, amidst all the - 
 trials of foreign and civil war, which strained the resources of our 
 country to the very verge of ruin, the task before you is certainly a 
 difficult and harassing one; but while the path of duty is often 
 narrow and difficult, it is always straight and so well defined that it 
 can never be mistaken. Sound financial policy and love of our 
 country's fair name alike demand from those to whom the adminis- 
 tration of its affairs have been intrusted the most uncompromising 
 hostility to the blind and dishonest frenzy which has taken hold of 
 Congress."
 
 180 AWAKENING IN THE UNITED STATES 
 
 inform his government that it was highly important to the 
 credit of the United States that a statement be made of assur- 
 ance of a veto of any bill which did not exempt the principal 
 and interest of the public debt from its operations. The price 
 of the bonds dropped, sales completely stopped, and the gold 
 premium advanced, while the financial world brought its argu- 
 ments to bear on the Finance Committee of the Senate, of 
 which Morrill of Vermont had become chairman. It soon 
 transpired that a majority of that committee could not be se- 
 cured for the recommendation of an absolutely free-silver-coin- 
 age measure like the Bland Bill, but that a majority would 
 favor doing something for the metal. Morrill of Vermont and 
 Dawes of Massachusetts, Republicans, and Bayard of Delaware 
 and Kernan of New York, Democrats, were absolutely opposed 
 to any measure for the issue of silver except in exchange for 
 government notes and of limited legal tender. In this situa- 
 tion Allison, of Iowa, proposed a compromise amendment, 
 changing the bill from a free-coinage measure to one for 
 the purchase of silver bullion at the market price, and the 
 coining therefrom of standard legal-tender dollars, the mini- 
 mum purchase being $2,000,000 worth a month and the maxi- 
 mum, $4,000,000. 
 
 Such was the situation when the regular session of Con- 
 gress began. The President, in his message, approached the 
 subject with some honeyed words for the silver advocates, 
 but in the end asked that in any legislation providing for a 
 silver coinage of legal-tender quality there might be a firm 
 provision exempting the public debt already issued and out- 
 standing from payment in any coinage of less commercial 
 value than the existing gold coinage. While he held that 
 neither the interests of the government nor of the people 
 would be promoted by disparaging silver, and that legislation 
 looking to the maintenance of the volume of intrinsic money 
 to as full a measure of both metals as their relative commer-
 
 WARNING OF SECRETARY SHERMAN 181 
 
 eial values would permit would be neither unjust nor inex- 
 pedient, he also held that it would be far better to pay the pub- 
 lic debt in gold than to seem to take advantage of the un- 
 foreseen fall in silver bullion to pay in a new issue of silver 
 coin, thus made so much less valuable. The President's words 
 were such as to leave the always sensitive financial world in 
 doubt as to what course he would pursue in any given con- 
 tingency. 
 
 Secretaiy Sherman was much more positive in his report. 
 He recommended any legislation that would maintain the 
 current value of silver coins at par with gold, the gold dollar 
 being inconveniently small for the multitude of daily transac- 
 tions, and silver coins could, to a certain extent, pass readily 
 among all classes and be of great convenience. But he added : 
 " This coin should be subject to the same rule as to issue and 
 convertibility as other forms of money. If the market value 
 of silver in it were less than that of gold coin of the same de- 
 nomination, and were issued in unlimited quantities and made 
 a legal tender for all debts, it would demonetize gold and 
 depreciate our paper currency." 
 
 Reviewing the history of the coinage acts of the govern- 
 ment, and holding that the importance of the gold standard 
 was everywhere conceded, he expressed the belief that all the 
 beneficial results hoped for from a liberal issue of silver coin 
 could be secured by issuing it in pursuance of the general pol- 
 icy of the act of 1853, in exchange for United States notes, 
 coined from bullion purchased in the open market, and main- 
 taining it by redemption or otherwise at par with gold coin, 
 making it a legal tender for such sums and on such contracts 
 as would secure its most general circulation. In conclusion he 
 
 " To still further secure a fixed relative value of silver and gold, 
 the United States might invite an international convention of com- 
 mercial nations. Even such a convention, while it might check the 
 fall of silver, could not prevent the operation of that higher law which
 
 places the market value of silver above human control. Issued 
 upon the conditions here stated, the Secretary is of opinion that the 
 silver dollar will be a great public advantage, but that if issued 
 without limit upon the demand of the owners of silver bullion it will 
 be a great public injury." 
 
 At the same time Chairman Morrill saw in the suggestion 
 of an international conference the possibility of delaying action 
 on a measure which appeared to him to invite financial disas- 
 ter, and he wrote to the Secretary, suggesting that the Presi- 
 dent promptly initiate some inquiry or negotiation with for- 
 eign governments, to see if we might not be able to treat with 
 them so far as to indicate an agreement upon a proper ratio for 
 the coinage of both gold and silver. The refusal of his com- 
 mittee to exempt in the bill those bonds negotiated at a low rate 
 of interest since 1S73 he declared to be a direct and palpable 
 violation of the statutes, and he considered that the adoption 
 of free silver coinage by the United States, independently, 
 would encourage European nations to adhere to the gold 
 standard, and that American securities would be sent home 
 for the most they would fetch. 
 
 Notwithstanding the serious condition of affairs, Sherman 
 resolutely continued his refunding efforts, urging the syndi- 
 cate to endeavor to place the 4-per-cents. and expressing the 
 belief that no unfavorable laws would be enacted. Belmont 
 and his associates replied that it was useless to try to sell the 
 bonds at par, or even at the sacrifice of the syndicate's com- 
 mission, when they .were being offered in the open market at 
 99. The bill was sure to pass the Senate, he thought, the Alli- 
 son amendment really being " immaterial," for the limitation 
 of the amount to be coined seemed to the syndicate of minor 
 importance and insufficient to allay the apprehensions of in- 
 vestors. 
 
 By the time the Senate had reached a consideration of the 
 bill, about $14,000,000 in bonds had been sent back from 
 Europe for sale, and every steamer was bringing a fresh sup-
 
 BELMONT FAVORS A CONFERENCE 183 
 
 ply, so that, although the natural balance of trade was in our 
 favor, no gold was imported. Thus England paid for our 
 cereals with our own bonds. In time the syndicate, as well as 
 Morrill and others, began to consider an international confer- 
 ence, or a conference, at least, with the Latin Union, as offer- 
 ing the only reasonable grounds for hope from escape from the 
 silver sentiment in Congress. Writing to Sherman, Novem- 
 ber 29, Belmont said: 
 
 " I wish the intelligent and well-meaning portion of the silver ad- 
 vocates in Congress (those who intend a bimetallic circulation on 
 sound and honest principles) could be induced to a calmer considera- 
 tion of the whole subject, and would not allow themselves to be 
 dragged in the wake of ignorant demagogues who bellow out their 
 insane cry against the bondholder, profess to be the poor man's 
 friend(?), and are his toorst enemies. We might then, in all proba- 
 bility, arrive at the passage of a bill for the appointment of half a 
 dozen, or a dozen, scientific and practical men to meet an equal num- 
 ber of experts on the part of the Latin Union in conference. Such 
 a congress can certainly deal better with this important question 
 than can be done by hasty and prejudiced legislation, in which but 
 too often the public good is sacrificed to sectional and party feeling. 
 The position and interests of France, the leading power in the Latin 
 Union, are almost identical with ours in regard to this question, and 
 I have reason to know that some of her wisest and most influential 
 financiers are in favor of a bimetallic circulation. Why not try to 
 go hand in hand with a government which has so admirably managed 
 its finances during the last six years that, notwithstanding war, do- 
 feat, and spoliation, and in the face of the most threatening political 
 situation, her financial and commercial condition is at this moment 
 sounder than that of her conqueror, and, perhaps, better even than 
 that of England? 
 
 " I am not at all a blind and stubborn opponent of silver. On the 
 contrary, I should be sorry to see hasty legislation excluding it alto- 
 gether, but national faith and honor must not be jeopardized. That 
 once secured and put on its former sound basis, I will go as far as 
 anybody towards protecting our large silver productions and trying 
 to secure a sounder medium of circulation of sufficient volume to re- 
 store prosperity and activity of industry and commerce, by which 
 debtor and creditor may both be benefited alike and become better 
 friends, so as to understand that their interests are identical, and 
 that only by laws of equal justice to West and East, North and 
 South, can Ave hope to resume again our position in the front rank of 
 the great commercial and agricultural nations of the world." 
 
 But the silver men, now fully aroused all over the coun- 
 try, said that all warnings were dictated by selfishness. They 
 claimed that the bankers and bondholders were desperately in- 
 terested in the gold standard because it gave them control of
 
 184 AWAKENING IN THE UNITED STATES 
 
 the markets and increased their income through the apprecia- 
 tion of gold, that coined silver was as much " specie " as coined 
 gold, and that the coinage of the former would, instead of hin- 
 dering resumption, aid it by providing the treasury with more 
 specie and enabling the people to buy the new bonds with 
 silver. Offers of this kind came to the Secretary, and not en- 
 tirely from the West. Colgate & Co., of New York, offered 
 to buy at par $150,000 of 4-per-cents., principal and interest 
 payable in silver dollars, paying for them an amount of silver 
 necessary to produce the sum required for the payment in 
 silver dollars at par. The offer at once got into public print, 
 although both the Secretary and Colgate & Co. denied giv- 
 ing it out. Sherman replied courteously that, as gold coin was 
 the only coin yet authorized by law, he could only receive 
 gold coins for bonds. He gave them to understand that he 
 was not ignorant of the fact that with $137,337 of gold coin 
 they could buy enough silver dollars to pay for $150,000 worth 
 of bonds, netting them the handsome profit of $12,663. But 
 how about the government ? Colgate & Co. made a rather 
 discourteous reply, and the matter ended, though it was used 
 as an argument for paying outstanding bonds in silver. 
 
 In pursuance of this argument Stanley Matthews, who had 
 been chosen to succeed John Sherman in the Senate, intro- 
 duced a resolution early in January, 1878, boldly declaring 
 that, the principal of and the interest on the public debt, 
 issued or authorized, prior to the demonetization of silver, by 
 the acts of 1869 and 1870, were payable at the option of the 
 government in silver dollars without violation of public faith 
 or in derogation of the rights of the public creditor. The ma- 
 jority of the Senate refused to refer it to a committee or to 
 make it a joint resolution, which would have required the 
 signature of the President, or to accept any amendment what- 
 ever, and it passed at once by a vote of 43 to 22. The House 
 passed it on January 29 by a vote of 189 to 79.
 
 EFFECTS OF THE MATTHEWS RESOLUTION 185 
 
 The market for United States bonds was upset completely. 
 Our securities dropped If per cent, in London, and were of- 
 fered in large quantities. It began to be realized that the 
 silver bill might pass over a veto. The London agent in the 
 refunding operations wrote to Sherman that the argument 
 being used in Congress that the silver dollar, if remonetized, 
 would advance to par with gold was a grievous mistake. " The 
 great nations of the earth," he said, " will never again recog- 
 nize silver as a standard. Further demonetization is far more 
 likely to occur than any remonetization." This was not en- 
 couraging to those who were hoping for saving results from an 
 international conference. 
 
 Sherman threw all the optimism he could into the situa- 
 tion. He still hoped that the Bland-Allison Bill would be 
 amended so as to except the public debt, but he was extremely 
 embarrassed, and said he might have to protect the call already 
 made with gold on hand, thus depleting his reserve for resump- 
 tion. " I cannot hope to succeed," he said, " if the result of 
 the pending legislation disables me from selling 4-per-cent. 
 bonds. This is a rather discouraging prospect for the future, 
 but I feel that I have done my utmost to carry out the law and 
 will still continue all proper effort in the hope that something 
 will turn up that will enable me to succeed." 
 
 As the syndicate could do nothing, or, at least, was doing 
 nothing, to dispose of 4-per-cents. under the arrangements 
 made with the Secretary, and as he was convinced that his suc- 
 cess depended upon their sale, he gave notice to the syndicate 
 January 14 of the termination of the contract, and of his deci- 
 sion to open subscriptions in the United States on a different 
 plan, payments to be made in coin, called bonds of the United 
 States, or gold certificates. He threw himself wholly on the 
 mercy of a patriotic people, knowing that if they subscribed at 
 all they must pay in gold coin or certificates or called bonds, for 
 there was no silver coin in circulation to speak of. He was dis-
 
 186 AWAKENING IN THE UNITED STATES 
 
 posed to discontinue all London operations, and so informed 
 the agent there on the 28th, adding, " We may as well admit 
 that the prospect is that the Bland Bill, or some other bill very 
 nearly as bad, will pass both Houses by a two-thirds vote, and, 
 although there may be some delay, it is likely that silver will 
 be remonetized in this country upon the substantial basis of the 
 old law." 
 
 During the debate in the Senate various amendments were 
 offered from both sides. One, requiring $100,000,000 in sil- 
 ver dollars to be coined within three years, was lost by a vote 
 of 26 to 41. No amendments for a different ratio could secure 
 a majority. The Allison compromise was accepted as the most 
 practical solution by the silver men so long as free coinage 
 could not be secured; and while the more radical silver men 
 considered an international conference as unnecessary, or as 
 dangerous, the amendment, which was made the second section 
 of the bill, providing that immediately after the passage of the 
 act the President should invite the governments of the coun- 
 tries composing the Latin Union, and of such other European 
 nations as he might deem advisable, to join the United States 
 in a conference " to adopt a common ratio between silver and 
 gold for the purpose of establishing, internationally, the use 
 of bimetallic money, and securing fixity of relative value be- 
 tween those metals," easily passed. The conference was to 
 be held within six months of the passage of the act at some 
 place to be agreed upon, by the executives of the governments, 
 whenever any three of them had signified their willingness to 
 unite. In this shape the bill passed the Senate February 15, 
 by a vote of 48 to 21; six days later, it came up in the House 
 on a motion to concur in the Senate amendments, and it passed 
 by more than a two-thirds vote and after a debate limited to one 
 hour. The amendments affixed to the measure were anything 
 but satisfactory to the friends of silver. They believed the 
 people of the LTnited States demanded the complete restoration
 
 PROVISIONS FOR A CONFERENCE 187 
 
 of the coinage regulations existing previous to 1873, no matter 
 what other nations did, and, if they had considered it safe to 
 have made a longer fight, they would have insisted upon free 
 coinage. The opinion of most of them was fairly stated by 
 J31and when, referring to the mutilation of his bill, he said: 
 " It is now a question at this late day of the session whether we 
 are to take this bill, or whether a determination to disagree 
 with the Senate shall defeat the legislation upon this subject. 
 I do not like this bill. It is not what the country expects. But 
 I am in favor of taking this now, as making one step in the 
 right direction." The average Congressman considered the 
 feelings of the voters such that his " political scalp," depended 
 on his earnestness for free coinage by the United States at 
 once. 
 
 K'o attention whatever was given to the provision regard- 
 ing an international conference in the House. It was regarded 
 there simply as an effort to avoid free coinage, and, as has been 
 said, the radical silver men in the Senate regarded it with dis- 
 approbation or suspicion. They were aware that the sugges- 
 tion of a conference had come from those opposed to free silver 
 coinage, and even Jones of Nevada voted against it, although 
 he had advocated such a conference in the report of the Silver 
 Commission. Allison, who had the management of the meas- 
 ure, regarded it of vast importance to the ultimate success of 
 silver coinage. It is doubtful if he and others would have 
 favored the measure without that provision. They looked 
 upon the coinage of silver at the ratio of 16 to 1 as a sort of 
 temporary affair, calculated to satisfy public sentiment for 
 the time, but not calculated to restore in any sense the double 
 standard. In explaining the necessity of a conference Allison 
 said : 
 
 "We, by our legislation here, fix the value of a silver dollar at 
 412^ grains, which is the relation of 10 to 1. The bimetallic nations 
 of the world to-day have the fixed relation of 1.~.50 to 1. which over- 
 values silver S 1 /^ per cent., as compared with the monetary unit we
 
 188 AWAKENING IN THE UNITED STATES 
 
 propose. . . . The result will be either that the bimetallic nations 
 of Europe will keep their mints closed, or, when they open their 
 mints to the free coinage of silver, every silver dollar that is in the 
 United States will flee again to Europe, as it did after the unfortu- 
 nate and mischievous legislation of 1834, because we then estab- 
 lished a wrong relation between the two metals." 
 
 The plain inference from this is, that some of those who 
 were advocating the measure had no hopes of keeping the two 
 metals in concurrent circulation at full legal tender without 
 international co-operation. One naturally asks, therefore, 
 why in seeking to restore the silver coinage the French ratio 
 was not at once adopted, for, if Europe closed her mints, the 
 burden of maintaining the parity would be thrown entirely 
 upon the United States, and if Europe opened her mints the 
 United States would lose the very metal they were trying to 
 rehabilitate. A sufficient answer to this is that the passion 
 of the hour was " the dollar of our daddies." 
 
 The majority of the silver men claimed that our coinage 
 was purely a domestic business, anyway; that it made no differ- 
 ence what Europe had done or might do. One of the Southern 
 senators had given the matter of ratios so little thought that 
 he was compelled to ask for information as to what was 
 the ratio in Europe, and also that fixed by the bill for which he 
 had been earnestly and scrupulously talking and voting. An- 
 other wanted no foreign alliances or entanglements. " Let 
 other nations fix their money standard as they will," he said, 
 " let us fix ours as suits our convenience." After having 
 worked and debated for weeks to secure a partial restoration of 
 the old dollar, he did not propose, if he could help it, to go 
 abroad to find some sanction for the effort in the esteem and 
 approbation of foreign nations. Edmunds, of Vermont, who 
 was really the only outspoken advocate of the gold standard in 
 the Senate then, and whose sarcastic thrusts were frequent 
 features of the debate, asked Allison if he would not strike 
 out that provision limiting the conference to the consideration
 
 SARCASTIC THRUSTS OP EDMUNDS 189 
 
 of the double standard and allow it to consider also the expe- 
 diency of a single standard. 
 
 " That I cannot consent to," replied Allison. " That is the 
 very thing we are struggling for here now, and I do not pro- 
 pose to treat it away." 
 
 " Is it treating it away to be willing to talk about it? " asked 
 Edmunds. 
 
 " I think so," was the reply. 
 
 " I think so, too," quickly retorted the Vermont statesman, 
 " because you cannot stand on the reason of it." Edmunds 
 was the only senator of the 21 voting against the final passage 
 of the bill who voted against the amendment for a conference, 
 and his opposition, as he explained, was because it would be 
 a conference tied up " to this thing of a double standard of 
 value," which he likened to thimble-rigging he had seen at 
 shows where the pea, that could not, in the nature of things, 
 be under both thimbles at the same time, was always put under 
 the one that cheated the public. 
 
 President Hayes sent in his veto message on February 28, 
 strongly arguing that the right to pay duties in silver or in 
 certificates for silver deposits would, when issued in sufficient 
 amount to circulate, put an end to the receipts of revenue in 
 gold, and compel the payment of silver for both principal and 
 interest of the public debt, and thus break the pledges the 
 government had practically made. The bill was passed over 
 the veto the same day by a vote of 46 to 19 in the Senate, and 
 196 to 73 in the House. 
 
 The success of the resumption of specie payments, to take 
 place by law ten months later, depended now upon maintaining 
 the stock of coin already accumulated and, apparently, upon 
 accumulating considerable more from the people of the United 
 States. There seemed to be little hope of help from Europe. 
 At this time the government held in various places about 
 $104,000,000 in gold coin, $11,000,000 in gold bullion,
 
 190 AWAKENING IN THE UNITED STATES 
 
 $5,000,000 in silver coin, and $2,800,000 in silver bull- 
 ion. The preponderance of gold should be noted here, as it 
 largely explains why the immediate effect of the bill was harm- 
 less so far as resumption was concerned. After the passage of 
 the act, legal-tender silver dollars were made receivable, the 
 same as gold, in payments of popular subscriptions to the loan, 
 but, of course, there were as yet none in circulation. The large 
 'New York bankers told the Secretary that it would be useless 
 to endeavor to sell 4-per-cents., but he kept at it, declining all 
 offers for 4^-per-cents. unless as good as 4 at par, so as not to 
 force the 4's to a discount. He dared not advertise a 4^ loan, 
 fearing the bankers would bid so low as to force the 4's out. 
 Considering it essential to obtain $50,000,000 in gold coin 
 before January 1, 1879, in April he went to ]^ew York to see 
 what could be done. He met the representatives of the houses 
 belonging to the old syndicate, but his propositions were coldly 
 received. They would have nothing to do with a 4-per-cent. 
 loan, on account of the uncertainty of the market and the 
 silver act, which was harped on considerably. Sherman asked 
 for an offer for 4Vs, and, after consulting with the Rothschilds, 
 Belmont offered 101 for $100,000,000. The Secretary said 
 he would accept 101^ 'less ^ of 1 per cent, commission for 
 $50,000,000, they to pay the expenses of the loan, and they 
 finally accepted it. This seemed to make resumption certain. 
 The government was left free to sell 4's for refunding purposes 
 if it could, and, as the market kept steadily improving, popu- 
 lar subscriptions came in briskly, $377,000,000 being taken 
 mostly in this country from January 1, 1878, to the day of 
 resumption, thereby displacing old 6's, and saving in yearly 
 interest $7,540,000. ' Our bonds on the London market were 
 
 i The skill with which Secretary Sherman conducted the refund- 
 ing and resumption operations in these critical times cannot be easily 
 overlooked. In abandoning the policy of placing bonds by syndi- 
 cates exclusively and adopting sale by public advertisement " under 
 circulars," he made a considerable saving and kept the government's
 
 CONDITIONS PRECEDING THE SILVER ACT 191 
 
 by May 1 three points higher than during the silver excite- 
 ment, opinion both here and abroad changing somewhat as to 
 the effect of the law, the feeling being that it might not do 
 harm temporarily and, when it did, could be repealed. Mean- 
 while it had checked somewhat the popular craze for free 
 silver. 
 
 In studying the conditions of that eventful year dispas- 
 sionately and at this distance, one cannot fail to see that there 
 was much less ground for alarm over the immediate effects of 
 the silver act than the financiers imagined. The monetary 
 conditions of the country at that time were exceptional. We 
 had no silver coins to speak of, and they were unquestionably 
 needed to a certain extent. The capacity of the mints was 
 limited to about 2,000,000 dollar pieces a month, and, coined 
 at this rate, it would have taken at least eight years before 
 the circulation equalled the circulation of legal-tender silver 
 coins in Germany, and twice that time to have equalled the 
 silver circulation of France. Public convenience would have 
 been as well and more safely served by such an issue of silver 
 of limited tender, but, when a thrifty people was ready to ab- 
 sorb the new coinage, its legal-tender quality could do no 
 immediate harm. The danger lay in continuing after a suffi- 
 cient amount of such money had been issued. The average 
 person, observing that the new coins circulated at a parity 
 with gold, easily fell into the error of thinking that the issue 
 could be kept up indefinitely, and that even free silver could 
 work no injury. At the time when France was flooded with 
 silver and had closed her mints, the United States had little sil- 
 ver and had opened her mints. The latter were in a position to 
 do with safety what would have been disastrous to France. 
 
 The United States had much less to fear from a law like 
 
 indebtedness largely in this country. His total sale of 4's was $740,- 
 847,000, at a cost of only $2,045,802.60. Under the plan followed by 
 his predecessors, it would have cost $3,704,239.
 
 192 AWAKENING IN THE UNITED STATES 
 
 the Bland-Allison Act than had the cause of bimetallism. It 
 was, under the circumstances, more hostile to silver and its 
 future interests than if it had provided simply for the coinage 
 of dollars of limited tender, say, up to $20. The latter would 
 have been an announcement to the world that while we pro- 
 posed to make silver a part of our specie circulation, as it 
 was in England and every great commercial nation, we pro- 
 posed also to adhere to the gold standard till we could secure 
 international bimetallism. Such a position would have had a 
 marked effect upon Europe at that time, for we were large gold 
 producers, and also large exporters of cereals and other prod- 
 ucts required by Europe, thus placing us at an advantage in 
 the accumulation of gold at a time when Europe was begin- 
 ning to be seriously disturbed by its scarcity, and the diffi- 
 culty of maintaining a sufficient reserve in its banks of issue. 
 Instead of that, we foolishly began the coinage of silver of full 
 legal tender, and practically announced that it was a first step 
 towards an unrestricted silver coinage. This was exactly what 
 commercial Europe, which, in its study of the silver question, 
 was about five years ahead of the United States, hoped for as a 
 means of enabling it to more easily maintain a gold standard. 
 Europe held enough of our securities to control our gold if 
 we adopted a free silver coinage, and the holders of these secu- 
 rities were well aware of it. 
 
 For the purposes of securing a better appreciation of the 
 financial and monetary conditions in Europe, it may be well 
 to give a brief resume of financial events there from the spring 
 of 1877 to the time of the passage of the Bland- Allison Act as 
 shown by the weekly market reviews at London. Early in 
 May, 1877, the Bank of England increased its rate of dis- 
 count to 3 per cent, because of the large withdrawals of gold 
 for export, a large portion of which was sent to Germany. It 
 was understood that Germany had about $60,000,000 worth 
 of silver which it was anxious to dispose of as quickly as prac-
 
 CONDITION OF THE EUROPEAN MAKKETS 193 
 
 ticable. That government had coined very little gold for six 
 months, but had kept it in bars for greater convenience if 
 needed for military purposes, troubles between Russia and 
 Turkey threatening the revival of the Eastern Question. But 
 Germany was finding it somewhat difficult to keep the gold 
 acquired by so great a sacrifice in the sale of silver, and the 
 Reichsbank was compelled in May to raise its rate of discount 
 to 5 per cent, and the rate of interest for advances to 6 per 
 cent. The government also began to find that the new silver 
 coinage, fixed at ten marks per capita, might be insufficient for 
 some portions of the country, especially the southern portion, 
 because of the small amount of wages earned by the people 
 and their little savings. The French had had an unexampled 
 era of prosperity, and they were more inclined to build upon 
 it for the future than to throw away its fruits in war. Eng- 
 land also was very desirous of avoiding the Eastern Question if 
 possible. During this month considerable gold was imported 
 from the United States, but it went to Germany and to France, 
 which was preparing for the complete resumption of specie 
 payments. The price of silver ruled at 54 pence in London, 
 and was flat at that. 
 
 In June the Indian government sought a loan in England 
 of about $10,000,000 at 4 per cent., Lord Hamilton ex- 
 plaining in Parliament that it was required to meet a deficit 
 caused by the famine and the depreciation of silver. Russia 
 was also trying to negotiate a loan in Paris and Berlin for $60,- 
 000,000 at 5 per cent., the issue price of the bonds to be 70 
 per cent, of the principal, with a liberal allowance to a syndi- 
 cate for placing them. She had already made a forced loan 
 at home of about 200,000,000 roubles. Her finances were in 
 a bad condition for war, and very little could be learned about 
 them. Germany resumed her gold coinage during this month 
 at the rate of about. $700,000 per week, and the bank re- 
 duced its rate to 4 per cent., having a stock of about $140,000,- 
 13
 
 194 AWAKENING IN THE UNITED STATES 
 
 000 in coin and bullion. The government offered a 4-per- 
 cent, loan at the low price of 94. 
 
 During the first half of July the demand for gold relaxed 
 somewhat. The Bank of England reduced its rate to 2^ and 
 then to 2 per cent. 
 
 A large amount of gold arrived from Australia, and the 
 demands from famine-stricken India stiffened the price of 
 silver. Germany quickly availed herself of this situation, 
 selling silver at 54 pence and withdrawing gold from London. 
 In nine days, ending the 28th, she took about $5,000,000 worth 
 of gold from the London market. The movement of gold 
 for twelve months previous (from July, 1876, to July, 1877), 
 at the principal commercial centres is well shown by a com- 
 parison of the bank balances, as follows : 
 
 Bank of England, July 26, 3876 33.037,926 
 
 " 25, 1877 27,029,505 
 
 Loss 6,008,421 
 
 Bank of France, July 27, 1876 83,508,000 
 
 " " " 26, 1877 88,123,000 
 
 Gain, . 4,615,000 
 
 Imperial Bank of Germany, July 25, 1876, . . . 26,669,000 
 
 " 26, 1877, . . . 27,206,000 
 
 Gain, 537,000 
 
 Netherlands Bank, July 24, 1876 13,437,000 
 
 " 30, 1877 12,546,000 
 
 Loss, . . 891,000 
 
 National Bank of Belgium, July 20, 1876, . . . 5,464,000 
 
 " 26, 1877, . . . 4,187,000 
 
 Loss, 1,277,000 
 
 Though Germany had in the course of the twelve months 
 taken nearly 10,000,000 of gold from the London mar- 
 ket alone, the Reichsbank had done little more than hold its 
 own; the great gainer was the Bank of France. All through 
 August the drain of gold from London continued, and the bal-
 
 BANK OF ENGLAND SUFFERS 195 
 
 ance at the middle of the month showed that the Bank of Eng- 
 land had lost over 9,000,000 as compared with the same 
 date in 1870. In the latter part of the month shipments 
 of gold to the United States began, and the Bank of England 
 at once put up its rate to 3 per cent, and also increased the price 
 of American eagles. By this time the Bank of France was in 
 such a good condition that it ceased issuing any notes of less de- 
 nomination than 1000 francs, which practically amounted to 
 a resumption of specie payments. Up to this time Germany 
 had withdrawn old silver from circulation to the amount of 
 $200,000,000. 
 
 Early in September the Reichsbank was compelled to ad- 
 vance its rate again to 5 per cent, to keep its gold, a large 
 amount of that which it had been taking away from London 
 having found its way to France, whose bank seemed to gather 
 it in easily, and hold it without raising its low discount rate. 
 
 The fact was anything but pleasing to Germany, which 
 could obtain gold only by selling its silver at a low price, and 
 then only to see it withdraw to the country she had left ap- 
 parently prostrate six years before. But the price of silver 
 being firmer than for some time, she continued to dispose of 
 her stock and draw on London for gold. 
 
 Early in October the Bank of England advanced its rate to 
 4 and soon after to 5 per cent. As trade was dull and money 
 abundant, such a high rate of discount threw the market into 
 great confusion, and placed the other banks in a difficult posi- 
 tion; but the drain of gold was considered serious, and it was 
 reported that any large withdrawal of the metal for the United 
 States would lead to a fi-per-cent. rate. It looked then as if 
 large shipments to the United States could not be avoided, for 
 the European crops were short, and the balance of trade was 
 greatly in favor of America. 
 
 But in November the situation was relieved. As soon 
 as the Bland Free Coinage Bill was introduced, Germany with-
 
 196 AWAKENING IN THE UNITED STATES 
 
 held sales of silver, and so could take no gold from London, 
 which was reinforced by large shipments from Australia and 
 India. The Bank of England reduced its rate to 4 per cent. 
 It was the general understanding in the market that the man- 
 agers of the German financial affairs were holding off in the 
 hope of a better market and better prices for silver in America 
 through our legislation, and it was openly stated in France that 
 silver legislation in the United States would afford the gov- 
 ernment an opportunity to go to the gold standard. France had 
 coined but a small portion of the amount allotted to it by the 
 last arrangement of the Latin Union, and still the country was 
 flooded with silver. 
 
 By January 1, 1878, the fear of an immediate gold famine 
 had passed. English investors had dropped our bonds, old and 
 new, when the passage of the silver bill seemed assured, and, 
 being sent to this side, they absorbed our balance of trade. In 
 other words, but for the silver bill we should have compelled 
 England to have paid in gold for the cereals she had bought, 
 an operation which would not only have facilitated our re- 
 sumption, and very likely have made unnecessary the last issue 
 of 4r|'s, but would have so squeezed the gold reserves in Europe 
 as to have compelled the governments to regard a conference 
 with favor ; as it was, England paid us in our own bonds, which 
 at considerable expense had been negotiated abroad. The Ger- 
 man holders of our securities were reassured by the press of 
 the country, which pointed out that the possible loss on them 
 from such a measure as the Bland Bill could not be much 
 greater than 2 per cent., or the cost of exporting silver to 
 America and there having it recoined and exchanged for 
 gold. " This further contingency is to be considered," said 
 the Frankfurter Handelsblatt " that possibly the United 
 States may in time possess no gold coin, on account of its con- 
 tinued exchange for silver, and that practically a single sil- 
 ver standard would be introduced in place of a double stand-
 
 SILVER COINAGE SUSPENDED IN FRANCE 197 
 
 ard. But such an event could scarcely happen for a year, at 
 any rate, after the double standard should be established." 
 In the second week of January the German government sent 
 $10,000,000 worth of silver to London to be held to await the 
 action of our Congress. A London syndicate purchased on 
 speculation silver amounting to $2,750,000 in expectation of 
 a coinage demand from the United States. It obtained the 
 money to carry it from the Bank of France at the rate of 1 
 per cent, per annum, pledging the silver as collateral at 80 per 
 cent, of its market value. 
 
 The sentiment in favor of a single gold standard seemed to 
 be growing in France. In February, at the very time when 
 our Congress was engaged in passing the amended silver bill, 
 the French Assembly was discussing the question of terminat- 
 ing the connection of France with the Latin Union. The Min- 
 ister of Finance introduced a bill (which was passed) providing 
 for a further suspension of silver coinage for twelve months. 
 The possible remonetization of silver in the United States 
 might, he said, relieve France of some of her difficulties in 
 maintaining the double standard; but at a meeting of the dele- 
 gates to the Latin Union to be held in October, the question of 
 continuing the standard would be discussed. Meanwhile he 
 urged that the only sound course for France was to cease coin- 
 ing legal-tender silver altogether. 
 
 Even this brief review of the monetary conditions in 
 Europe during the nine months preceding the passage of the 
 Bland-Allison Bill must convince any one that the provision for 
 silver coinage first, and a conference afterwards, was a serious 
 blow to the future of general bimetallism. England had 
 grave doubts concerning the situation while the drain on her 
 stock of gold lasted. Had nothing occurred to relieve the 
 market, her delegates would not have appeared at the con- 
 ference with such haughty reserve, and the attitude of the 
 states of the Latin Union would have been different. Europe
 
 198 AWAKENING IN THE UNITED STATES 
 
 could not appreciate the feeling of the American congressmen 
 that something must be done at once to appease the voters 
 in their districts. 
 
 But a harder blow at bimetallism than the immediate coin- 
 age of legal-tender silver dollars was the coinage at the ratio 
 of 16 to 1. Very little can be said of the sagacity of those 
 earnest advocates of the remonetization of silver who, after 
 all the information obtained by the commission of 1876, and 
 after repeated warnings in the public prints from those favora- 
 ble to bimetallism, forced the government to coin silver dol- 
 lars at the ratio of 16 to 1, and then proposed to ask Europe 
 to agree with us. It was a ratio that existed nowhere else in 
 the world, and that Europe could not adopt without the ex- 
 penditure of millions. France alone possessed a stock of legal- 
 tender silver amounting to nearly $500,000,000; and when 
 to this was added the silver of Italy, Switzerland, Belgium, 
 Greece, and Spain, and the new German coinage, all at the 
 ratio of 15.50 to 1, there was a stock of silver coin amounting 
 in value to at least $1,000,000,000 in Europe, and there were 
 not, probably, when the act passed, one hundred American 
 silver dollars at the ratio of 16 to 1 in existence ! Leaving out 
 of the question any financial wisdom, it ought not to have re- 
 quired much of the ordinary variety to have suggested the 
 utter folly of resuming the coinage of the " daddy dollars " 
 on a large scale and then running over to Europe after an 
 agreement on a common ratio. But, strangely enough, the 
 point did not seem to be sufficiently appreciated by any one in 
 Congress save a few like Allison, and he did not make it so 
 serious as to suggest, unless in committee, the adoption at once 
 of the French ratio. He made the fact that coinage at the 
 ratio of 1 6 to 1 would compel France either to close her mints 
 or to take all our silver the reason for a conference, but he 
 appeared to overlook completely the possibility that France 
 would, by keeping her mints closed, thus make a conference a
 
 A BLOW AT BIMETALLISM 199 
 
 waste of time and money. If international bimetallism or 
 free coinage by the United States alone could have 
 raised silver from the commercial ratio of 17.50 to 1 to the 
 ratio of 16 to 1, it could just as easily have raised it to 
 that of 15.50 to 1, for, if a fixed ratio can be maintained by 
 international bimetallism at all, it is simply necessary to select 
 the most convenient ratio within the limits that civilized na- 
 tions recognize. 
 
 The result of the work of Congress in the interests of silver, 
 therefore, was to ruin the prospects of a conference, and place 
 Europe in an attitude of expectancy. There was the reasona- 
 ble expectation and belief abroad that the silver sentiment here 
 was strong enough to soon overcome the conservatism of the 
 Senate and result in throwing the mints open to silver. Be- 
 sides, there was the possibility that the limited purchase of the 
 metal by our government might raise its price, thus enabling 
 Germany to drop her holdings to better advantage, and ulti- 
 mately freeing the Latin Union from its difficulties. Parieu, 
 who had become the leader of the gold monometallists in 
 France, said in a letter to the American Minister at Paris: 
 " The progressive and intelligent political economists of 
 Europe who are occupied with monetary questions will be 
 divided between the desire to see America, in the interests of 
 general legislation, keep in the path of its legislation of 1873, 
 and that of receiving from her the means of disburdening 
 their national circulation at the least cost of the ballast of 
 silver which exceeds what is necessary for a suitable amount of 
 coinage." The statesmen of Europe, for the sake of the mone- 
 tary systems of their own governments, were naturally in- 
 clined to take the latter view.
 
 CHAPTER V 
 
 FIKST EFFORTS TO SECURE INTERNATIONAL BIMETALLISM - THE CON- 
 FERENCE OF 1878 
 
 IF we have followed intelligently the history of monetary 
 opinion up to this point, we have perceived that the variations 
 in the relative values of gold and silver during the first half 
 of the century, though slight, together with the differing 
 coining ratios in force, had resulted quite generally in an alter- 
 nating standard of value in countries which maintained the 
 principle of the double standard, and this, in turn, had fos- 
 tered a growth of sentiment for a single standard, which in 
 some countries, notably in the United States, had been ac- 
 cepted in practice, if not adopted by law, by overvaluing gold as 
 to silver in the ratio of coinage, and keeping silver in circula- 
 tion for small change by debasing it. A fair test of bimetal- 
 lism could not be expected in any state while other ratios pre- 
 vailed in states with which it had commercial relations. Under 
 such conditions, the great increase in the production of gold 
 following the discoveries in California and Australia tended 
 inevitably to make gold the metallic currency of the commer- 
 cial world, a fact which naturally suggested its general adop- 
 tion as the exclusive standard of value. At the same time 
 there was a broadening of international relations, a remarkable 
 development of mechanical arts, an improvement in methods 
 of transportation, and a general scientific awakening. Ad- 
 vantages' in international uniformity in weights and measures 
 suggested uniformity in coinage relations, first to the students 
 of political economy, and, later, through the ambition of an em- 
 peror, to the governments of commercial nations. Thus the
 
 THE CHANGE IN ECONOMIC OPINION 201 
 
 conference of 18 67 met and mapped out a plan for interna- 
 tional coinage upon a gold basis, naturally, and without any 
 serious misgivings as to the economic results. Whether the 
 plan would have been carried out had not political complica- 
 tions arisen and disturbed the peace of Europe it is, of course, 
 impossible to say; we can only imagine. It is, at least, safe to 
 say that had all the great governments undertaken to go to 
 the gold standard at once, it would have produced a crisis re- 
 sulting in a speedy return to bimetallism. The actual effect 
 of the step, as modified by the issues of war, was to lead na- 
 tions to seek the adoption of the gold standard gradually, 
 under coinage laws preserving in each case the characteristics 
 of the national currency, and ignoring the possible advantages 
 of internationality. This course, leading to an unprecedented 
 demand for gold at a time when its production began to de- 
 cline, and to a decreased demand for silver at a time when its 
 production greatly increased, together with other influences 
 which were noted in the last chapter, forced the two metals 
 quickly and widely apart in their relative values, and com- 
 pelled European nations which had failed to adopt the gold 
 standard to restrict or stop altogether the coinage of silver; 
 while the United States, the people awakening from a trance 
 produced by paper inflation, and discovering that they had not 
 known what they were doing when they cordially acquiesced in 
 the demonetization of silver an experience somewhat similar 
 to that of some men who upon becoming sober have no recollec- 
 tion of their actions while drunk resumed the coinage of the 
 discarded metal, and sought for the international adoption of 
 a double standard in 1878, a standard which the nations eleven 
 years before had considered an attack on sound sense and 
 logic. There is, perhaps, nothing in the economic history of 
 the world to match the curious shifting of opinion and action 
 in so short a period. 
 
 These facts have been briefly restated for the purpose of
 
 202 THE CONFERENCE OF 1878 
 
 calling attention to a remarkable difference in the two metals 
 as the human mind apparently views them for use as standards 
 of value. In 1867 gold was plentiful, circulated widely, was 
 cheaper at the legal ratios than silver, which was comparatively 
 scarce and difficult to keep in circulation. Gold suggested 
 itself as the better metal for a standard. The abundance of gold 
 was used as an argument for its adoption as the standard in 
 Congress and as late as 1873. Three years later gold began to 
 be scarce, to disappear from circulation, to accumulate in re- 
 serve funds, and to be worth more than silver at the legal ratios 
 of coinage, and silver became abundant in the circulation of 
 bimetallic countries. But silver did not then suggest itself as 
 the better standard, as gold had suggested itself a little before 
 under similar circumstances. When gold was abundant and 
 depreciated, the world availed itself of the opportunity to adopt 
 it as the measure of values; when silver became abundant 
 and depreciated, its re-adoption, even as a collateral standard 
 of values, was regarded as a species of repudiation of obliga- 
 tions. Is there, then, the natural tendency with advancing 
 civilization to give to gold a quality as a measure of values 
 which it denies to silver, and, if so, does it spring from a 
 righteous consciousness of economic fitness, or is it the wicked 
 offspring of selfishness, the despotism of accumulated wealth, 
 the filching of the struggling producer? This question in its 
 various phases occupies a large space in the voluminous discus- 
 sion of the last twenty years, and it is still unsettled. It will 
 be our endeavor, however, to keep as free as possible from the 
 theoretical and ethical features of the discussion in relating the 
 history of the international conferences called in the interests 
 of general bimetallism, and to develop mainly the more prac- 
 tical features of the efforts to bring the nations together. 
 
 President Hayes and his advisers considered the conference 
 authorized by the law of February 28, 1878, as highly desira- 
 ble, not only for the opportunities it might offer in an inter-
 
 INVITATIONS TO THE CONFERENCE 303 
 
 national way, but more for the possible quietus it might put on 
 the silver agitation at home. Invitations were soon sent to 
 the leading nations, and they elicited responses generally fa- 
 vorable. Germany declined the invitation courteously, on the 
 ground that, having recently adopted the gold standard, her 
 government could naturally take no part in the discussion of 
 the project of international bimetallism. Possibly, also, it was 
 not disposed to submit to an examination as to the stock of sil- 
 ver it desired to work off on the market, or as to its future 
 plans. England, which was considerably disturbed over the 
 possible effect of the continued decline of silver upon her trade 
 with her Indian possessions, wished to be represented, but, 
 being wedded to the gold standard, felt that consistency would 
 hardly permit her to take part in an effort to secure interna- 
 tional bimetallism; it might be considered an admission that 
 the government was dissatisfied with the gold standard. So a 
 reply was made to the American government to the effect that, 
 if the exclusive object of the conference were the establish- 
 ment of a fixed relation between gold and silver, England 
 could not accept, for the government could do nothing to com- 
 promise the gold standard, to which it proposed to adhere. If, 
 however, the invitation could be so widened as to permit the 
 consideration of the coins of various countries with reference 
 to a universal currency, the English government would send 
 delegates with the understanding that they would not be com- 
 mitted by any conclusions reached. Our government, of 
 course, modified the invitations to catch the English delegates, 
 and also those of the Scandinavian states, which placed them- 
 selves in exactly the same position England had taken. The 
 United States government at this time cared nothing about 
 the old scheme for an international unit of money; indeed, it 
 considered it as harmful rather than helpful to the cause of 
 bimetallism. John A. Kasson, then Minister to Austria, wrote 
 to Secretary Evarts immediately after the passage of the
 
 204 THE CONFERENCE OF 1878 
 
 Bland- Allison Bill, and urged that the subject of an interna- 
 tional unit be included in the invitation for a conference, if 
 one were to be held, but the administration gave the matter 
 no quarter till the English government made it an excuse to 
 get into the conference consistently. Kasson was interested in 
 the subject of an international unit for itself, having advocated 
 it strongly in the sixties, but it was used simply as a back door 
 to the conference for the gold-standard countries, who cared 
 nothing about it, and did not even suggest it in the conference. 
 
 Paris was mentioned by most of the governments as the 
 most convenient place for the meeting, and the date was fixed 
 for August 10. Senator R. E. Eenton, "W. S. Groesbeck, and 
 Francis A. Walker were appointed delegates for the United 
 States, and S. Dana Horton, who had written extensively in 
 favor of silver, and was designated by Congress as secretary 
 of the delegation, was later admitted as an accredited delegate. 
 Fenton, of Xew York, had represented his district in Con- 
 gress from 1857 to 1865, had been governor of the state from 
 1864 to 1868, and in 1869 had succeeded ex-Governor Morgan 
 in the Senate, his term having expired in 1875. He had been 
 a member of the 'Finance Committee of which Sherman was 
 chairman during the consideration of the Mint Bill, and was 
 a member of it when the bill became the " Demonetization 
 Act of 1873." Groesbeck had served in the capacity of an ex- 
 pert on the Silver Commission of 1876. General Walker was 
 the son of the distinguished economist, Amasa Walker, had 
 been made brevet brigadier-general in the war, and had been 
 chief of the bureau of statistics and superintendent of the cen- 
 sus, and at this time was professor of political economy and 
 history in the Sheffield Scientific School of Yale College. 
 
 The conference of 1878 was less notable than its predeces- 
 sor of 1867 in the number of men of talent and reputation it 
 contained. Tn point of ability the four leading figures were 
 Leon Say of France, George J. Goschen of England, Charles
 
 NOTABLE DELEGATES PRESENT. 205 
 
 Feer-Herzog of Switzerland, and General Walker of this coun- 
 try. Say, then in his fifty-third year, was the grandson of 
 the eminent French economist, Jean Baptiste Say, who died 
 in 1832. He made a special study of political economy and for 
 a long time was editor of the Journal dcs Dcbats. He had 
 been Minister of Finance under the presidency of Thiers and 
 McMahon, was considered an authority upon economic and 
 financial subjects, and had published many valuable works. 
 Goschen was regarded as the greatest authority in England 
 upon English financial questions. Entering Parliament in 
 1863 as a Liberal, he at once took a prominent part in affairs, 
 becoming a member of Lord Russell's cabinet in 1866, and of 
 Gladstone's in 1871. In 1876 he was the British delegate to 
 concert measures with France for the conversion of Egyptian 
 debts, and was also the head of the commission appointed to 
 consider the effects of the depreciation of silver upon the Ind- 
 ian currency, the report of which has been alluded to. He 
 was the author of several works, his " Theory of Exchanges " 
 having been translated into the French by Leon Say. By 
 the prominent part Feer-Herzog, of Switzerland, had taken in 
 the formation of the Latin Union in 1865, in the conference 
 of 1867, and by his published essays, Europe had come to rec- 
 ognize him as one of its leading authorities on monetary mat- 
 ters, and the most conspicuous advocate of the single gold 
 standard. 
 
 The following is a list of the countries responding to the 
 invitation of this government and their representatives : 
 
 A ustria-Hungary : 
 
 Count Von Kuefstein, Charge d'Affairs of Austria-Hungary 
 
 at Paris. 
 
 C. Von Hengelmiiller. First Secretary of the Legation at Paris. 
 Belgium: 
 
 Eudore Pirrnez. ex-Minister of the Interior, member of the 
 Chamber of Representatives; one of the Belgian Monetary 
 Commission of 1873. 
 Charles August Gamier, Councillor of Legation at Paris.
 
 206 THE CONFERENCE OF 1878 
 
 France: 
 
 L<5on Say. 
 
 Charles Jiigerschmidt, Minister Plenipotentiary in the De- 
 partment of Foreign Affairs. 
 
 Jean Louis Andr6 Kuan. Director of the Administration of 
 Coins and Metals under the Empire and under the Republic. 
 Great Britain: 
 
 George J. Goschen. 
 
 Henry Hucks Gibbs, ex-Governor and a Director of the 
 
 Bank of England. 
 
 Sir Thomas L. Seccombe, Financial Secretary of the Secre- 
 tary of State for India in Council. 
 
 William Brampton Gurdon, officer in the Treasury Depart- 
 ment. 
 Greece: 
 
 Nicholas P. Delyanni, Charge d' Affairs of Greece at Paris. 
 Italy: 
 
 Count Charles Rusconi, formerly Minister of Foreign Affairs. 
 Commander Cesar Baralis, Director of the Mint of Milan. 
 Chevalier Constantin Ressmann, First Secretary of the Italian 
 
 Legation at Paris. 
 The Netherlands: 
 
 A. Vrolik, ex-Minister of Finance. 
 
 W. C. Mees, President of the Bank of the Netherlands. 
 Russia : 
 
 T. de Thoerner, Privy Councillor and member of the Council 
 
 of the Minister of Finance. 
 Siceden: 
 
 C. Fr. Waern, ex-Minister of Finance. 
 Norway: 
 
 Dr. O. J. Broch, ex-Minister of Marine and Postmaster- 
 General. 
 Switzerland: 
 
 Charles Feer-Herzog. 
 
 Charles E. Lardy, Councillor of the Swiss Legation at Paris. 
 
 Only four of these had been members of the conference of 
 1867 Feer-Herzog of Switzerland, Broch of Norway, and 
 Mees and Vrolik of the Netherlands. The first two remained 
 stanch gold monometallists, the other two had become ad- 
 vocates of the double standard. Mees, it will be remembered, 
 while advocating a single standard of one or the other metals 
 in 1867, considered it unwise for all countries to adopt the 
 same metal. Vrolik was detained by sickness and unable to 
 participate in the conference, but his position was well known, 
 being president of the Society of the Netherlands for the Pro- 
 motion of Industry, which, in 1876, memorialized the king 
 in favor of international bimetallism.
 
 THE OBJECT OF THE CONFERENCE 207 
 
 The conference did little except to organize at its first meet- 
 ing, August 10, at the Department of Foreign Affairs. Say 
 was chosen president and Fenton vice-president. The former 
 in his opening remarks explained the reasons inducing the 
 Latin Union to restrict its silver coinage, and then to suspend it 
 entirely. The adoption of the gold standard by Germany and 
 the increase of the production of silver by the United States 
 had compelled it to protect itself, he said, but it still remained 
 in " an expectant attitude." " In the meantime," he con- 
 tinued, " the United States of America have adopted the policy 
 of returning to the system of the double standard, adopting also, 
 as in the past, their ratio of 1 to 16 instead of 1 to 15.50, which 
 is the relation of the two metals in the Latin Union." This 
 was a broad hint of the difficulties Congress had thrown in 
 the way of its own desires, or, at least, in the way of the only 
 bimetallism possible, by adopting the old ratio. The United 
 States delegates were then called upon to make known the in- 
 tentions and views of their government, and in response Fen- 
 ton said that, as some of the delegates, notably those of Great 
 Britain, had not arrived, he preferred to say little at the first 
 meeting except in acknowledgment of the responses to the in- 
 vitation of his government. " Without anticipating your dis- 
 cussion," he remarked, " it is but an expression of the distinct 
 object of the conference as indicated by the law under which 
 the representatives of the United States are commissioned to 
 meet you, that we will be able to agree upon a common ratio 
 between gold and silver for the purpose of establishing, inter- 
 nationally, the use of bimetallic money, and securing fixity of 
 relative value between the two metals. The specific means of 
 attaining this object we trust will soon be developed in the 
 discussion and comparison of views which is to follow." 
 
 At the next meeting, six days later, the English delegates 
 appeared. Meanwhile the American delegates had decided to 
 have Groesbeck develop the views of their government and
 
 208 THE CONFERENCE OF 1878 
 
 formulate the questions upon which the conference might be 
 called upon to pronounce itself. The small consideration given 
 to the matter of the international uniformity of coinage, which 
 alone was supposed to have led the English and Scandinavian 
 delegates to attend, may be judged from Groesbeck's opening 
 remark. " The object of the conference," he said, " is to re- 
 store silver to its former position ; to equalize gold and silver 
 upon a ratio to be fixed by agreement. This is the principal 
 object of the conference. I desire to say, however, in addition, 
 speaking in the name of my colleagues, that we shall be happy 
 to come to an understanding with the delegates of Sweden 
 and Norway, and of all other states interested in the establish- 
 ment of a coin of universal circulation." The delegates of 
 the United States, he explained, had no more power to bind 
 their government than the delegates of other states, and he 
 assured the conference that this country would be upon a 
 specie-paying basis the first of the following January, and, 
 therefore, able to take its full share in executing any engage- 
 ments entered into. In the effort to destroy the impression, 
 which had prevailed extensively in Europe, that this country 
 was taking the initiative in the conference because it pro- 
 duced silver, he argued that his government had no interest 
 in either silver or gold mines, that the production of silver was 
 greatly exaggerated, and that indications pointed to its de- 
 crease. He reviewed the history of the coinage legislation of 
 the United States, to show that the government was returning 
 to an old system, and was not actuated by selfish motives. Com- 
 ing down to the act of 1873, he said, " Silver was made to dis- 
 appear through inadvertence rather than intentionally, by an 
 omission to say anything about it. As a matter of fact, the sil- 
 ver standard was found to have been suppressed. The example 
 of Germany had proved contagious; no newspaper had dis- 
 cussed the question; public opinion, by no means enlightened, 
 was, so to speak, taken unawares, and great surprise was felt
 
 PROPOSITIONS OP THE UNITED STATES 209 
 
 when, a short time after the law was passed, the change was 
 fully perceived. In 1878, the legislator, better advised, de- 
 sired to re-establish the traditional system. If, contrary to 
 our intention, which was to treat the two metals on the foot- 
 ing of perfect equality, we have nevertheless limited the coin- 
 age of silver, this was on our side a mere measure of precau- 
 tion, adopted provisionally on account of the condition of the 
 market of the metals in Europe, and by the measures taken by 
 the states of the Latin Union." With a view to securing free- 
 dom of silver coinage in the future, they had sought a con- 
 ference, and he then proposed that it pronounce itself upon the 
 two following propositions : 
 
 " I. It is the opinion of this assembly that it is not to be desired 
 that silver should be excluded from free coinage in Europe and the 
 United States of America. On the contrary, the assembly believe 
 that it is desirable that the unrestricted coinage of silver and its 
 use as money of unlimited legal tender should be retained where 
 they exist, and as far as practicable, restored where they have 
 ceased to exist. 
 
 " II. The use of both gold and silver as unlimited legal tender 
 may be safely adopted; first, by equalizing them at a relation to be 
 fixed by international agreement; and, secondly, by granting to each 
 metal, at the relation fixed, equal terms of coinage, making no dis- 
 crimination between them." 
 
 A third proposition had been prepared, and was held in re- 
 serve in anticipation of a favorable moment to introduce it, a 
 moment which never came. It was this : 
 
 " III. The delegations here present agree to recommend to their 
 respective governments that, by the free coinage of silver at a re- 
 lation to be agreed upon, or, provisionally, through extended coinage 
 upon government account and the accumulation of silver bullion in 
 public treasuries, they make a concerted effort to restore silver to its 
 function of money of full power." 
 
 The omission to frame any proposition touching the matter 
 of an international unit was, of course, to be expected. ~No 
 one cared for it, and it was not considered necessary to allow 
 it even the scant distinction of occupying a place among the 
 propositions in reserve, but never to be called for. Thus com- 
 pletely had a human ideal vanished. 
 14
 
 210 THE CONFERENCE OF 1878 
 
 The American delegates, judging from Groesbeck's re- 
 marks, assumed that the Europeans possessed a limited knowl- 
 edge of the course of monetary events in the United States 
 following 1867; and they may even have come to believe that 
 silver was dropped in 1873 through an " inadvertence." As 
 a rule, the political conditions and events of this country are 
 little understood abroad. But the men who listened to Groes- 
 beck it may be humiliating to confess, but it is true had 
 watched monetary changes in America more closely, or, at 
 least, more intelligently, than the Americans themselves. They 
 knew, in 1873, that silver was dropped by law in this coun- 
 try at that time, had written about it, some of them had even 
 advised members of Congress against the step, and they had 
 naturally assumed that Congress knew exactly what it was 
 doing, and acted in furtherance of the policy advocated by the 
 United States and adopted at the conference of 1867. They 
 had read the reports of the Treasury and mint officials from 
 1870 to 1872, calling attention to the proposed discontinuance 
 of the silver dollar, and they could not understand how the 
 members of Congress, to whom the reports were made, had 
 failed to read and consider them. As soon as Groesbeck sat 
 down, therefore, Goschen expressed a desire to know what sig- 
 nificance was to be attached to the word " inadvertence." 
 Groesbeck replied that the American people had never been 
 asked whether they wished silver to remain a legal tender, that 
 no newspaper had called attention to it, that no commercial 
 body had considered or recommended it, and that many mem- 
 bers of Congress had since confessed that at the time the de- 
 cision was made they knew not what they were doing. 
 
 This brought Feer-IIerzog to his feet with copies of Ameri- 
 can documents from 1870 to 1873, specifically and plainly call- 
 ing the attention of Congress to the proposed discontinuance of 
 the silver dollar as a standard. It appeared, he said, that the 
 step was voluntarily and with reflection determined upon. He
 
 THE ALLEGED INADVERTENCE OF 1873 . 211 
 
 could not believe that Congress was generally informed only 
 upon those events or propositions which were explained in the 
 newspapers, and, if the people had not been informed, Con- 
 gress, which represented them, must, or should have known. 
 There was no plebiscite in the United States. Moreover, he 
 failed to see how the alleged subsequent surprise of the people 
 was admissible, as the law of 1873 had brought about no 
 change in the currency, silver having long before ceased to 
 be money in circulation. 
 
 General Walker hardly succeeded in removing the un- 
 pleasant features of this courteous reflection upon the delibera- 
 tions of Congress, by explaining that the change was even un- 
 known to men in the United States specially occupied with 
 financial and monetary subjects, for he himself had to confess 
 that, though at the time lecturing on money and occupying 
 a chair of political economy, he was not aware of what was 
 being done. The European delegates were charitable enough 
 to press the subject no further, though, had they been cruelly 
 inclined, they might have asked ex-Senator Fenton, who was 
 a member of the Finance Committee which was supposed to 
 have surreptitiously dropped the dollar finally, and who had 
 advocated the substitution of the trade dollar, if he also was 
 unaware of the nature of the act. 
 
 President Say took exception to Groesbeck's remark that 
 the action of the Latin Union had supplied a motive for the 
 restriction of silver coinage in the Bland-Allison Act. The 
 statement could not, he thought, be well founded in fact, for 
 the limit was fixed by an amendment to the original bill, which 
 was for free coinage. " The influence of the Latin Union," 
 he added, significantly, " seemed to have counted for so little 
 in the resolutions adopted by Congress on this occasion that 
 it does not appear that there was, even for a moment, any 
 question of conforming the American system to that of the 
 Latin Union by adopting the relation of 1 to 15.50." Groes-
 
 212 THE CONFERENCE OF 1878 
 
 beck replied that, while the sentiment of the people of the 
 United States was unequivocally in favor of free coinage, it 
 had appeared to Congress on reflection that it would be dan- 
 gerous for a state to act alone. Dana Horton added that the 
 whole question had been thoroughly discussed in the United 
 States, that the situation of the Latin Union had not been lost 
 sight of, and that the Silver Commission had advised the adop- 
 tion of the ratio of 1 to 15.50. He did not explain why Con- 
 gress had not taken the advice. This ended the preliminary 
 discussion, and the conference turned its attention to the prop- 
 ositions submitted in behalf of the United States. 
 
 The position of France, as stated by Say, was in effect 
 this: 
 
 Having the double standard in theory, it had it not in 
 practice, for the privilege formerly enjoyed by private per- 
 sons of having their silver coined at the mints had been with- 
 drawn. In taking this step, the government had declared cate- 
 gorically that it was not moving towards a gold standard, but 
 was in a condition of expectancy from which it should not 
 move except for good reasons, when they appeared, and then, 
 probably, to re-enter into the system of the double standard. 
 Placed in the centre of the Latin Union, France had collected 
 a great quantity of silver about 900,000,000 francs in the 
 Bank of France, and about 1,500,000,000 francs outside. It 
 certainly would not do, said Say, to withdraw a legal-tender 
 power from such a mass of silver and throw it on the metal 
 market as mere merchandise. Such an idea was inadmissible. 
 But France could not change its attitude of expectancy so long- 
 as the fall of silver should not be accurately recognized and 
 measured, and, notably, till Germany should have completed 
 the sale of its stock. Whatever that stock might be, so long as 
 it remained the market would be troubled and uncertain. This 
 might take place within two or three years; it was, he said, the 
 dark side of the question that deprived France of her freedom
 
 FIIANCE IN AN EXPECTANT ATTITUDE 213 
 
 of action. The propositions of the United States, therefore, 
 seemed premature to France, which could not find a way to ac- 
 cept them then, but was unwilling to have this lack of assent 
 considered as a condemnation of the bimetallic system. As 
 there was reason to believe that less than a majority of the 
 conference could pronounce in favor of the propositions of the 
 United States, it would be better for the conference to ab- 
 stain from making a formal answer to the questions put to it. 
 Better results, he thought, might follow if the states repre- 
 sented at the meeting should simply agree upon the expres- 
 sion of a common idea as to the employment of silver as money, 
 and should invite each other, reciprocally, to take no measures 
 in their domestic legislation of a nature to contribute to the 
 depreciation of silver. To the first paragraph of the proposi- 
 tion that " it is the opinion of the assembly that it is not to 
 be desired that silver should be excluded from free coinage in 
 Europe and the United States " France would willingly 
 give assent, although for the moment it could not return to 
 free coinage, and could not yet discover the reasons which, 
 perhaps, it might some day have for re-establishing it. As to 
 the second paragraph " on the contrary the assembly be- 
 lieve that it is desirable that the unrestricted coinage of silver 
 and its use as money of unlimited legal tender should be re- 
 tained where they exist, and, as far as practicable, restored 
 where they have ceased to exist " - France thought that sil- 
 ver ought to maintain the character of legal money where it 
 possessed it, but it could not assert that it would be proper 
 to give it that character everywhere where it did not possess 
 it. As to safely adopting the use of both gold and silver as 
 unlimited legal tender by equalizing them at a relation to be 
 fixed by international agreement, France could not say in 
 advance that there would be such a proportion between the 
 future production of silver in the mines and the regular and 
 constant demand of Asiatic commerce that the legal relation
 
 214 THE CONFERENCE OF 1878 
 
 would never come to be altered; it would be especially difficult 
 for France to assert the maintenance of this equilibrium when 
 it knew that in a moment Germany could throw upon the 
 metal market the mass of silver the government had in hand. 
 The only certain thing about silver, said Say, in conclusion, 
 was that its circulation did not proceed regularly, was un- 
 settled, and made sickly by the instability of ratio. It was not, 
 therefore, a final, absolute refusal which France opposed to 
 the project of the United States. The question might one 
 day be answered. 
 
 Say's statement showed that nothing could be expected 
 from France while Germany held off. Count Rusconi, of Italy, 
 thought it would be highly desirable to have Germany repre- 
 sented, and Goschen observed that Germany might possibly 
 consent to send delegates, under the same conditions and reser- 
 vations the English government had stipulated that is, in 
 expressing the resolution to remain firmly attached to the gold 
 standard. It was decided to have the president transmit to 
 the German government a copy of the minutes containing this 
 expression of the desire of the conference to have Germany 
 represented. Shortly afterwards he received a. letter from 
 the German Minister at Paris, stating that his government, 
 while expressing its thanks for the invitation, regretted its in- 
 ability to accede to the wish of the conference. So from this 
 point the mission of the United States became hopeless. 
 
 The response of some of the other states of the Latin Union 
 was decidedly less favorable than that of France, and it is not 
 improbable that France would have taken a decided stand for 
 the gold standard at this time had it not been for the mass 
 of silver in its currency and reserves. To have adopted the 
 gold standard unreservedly under such conditions would have 
 depreciated the currency in the hands of the people, and forced 
 a loss on the Bank of France which would have nearly wiped 
 out its capital. The position of Belgium and Switzerland was
 
 BELGIUM'S HOSTILITY TO BIMETALLISM 215 
 
 less complicated, much of their silver having passed into 
 French hands. 
 
 Speaking for the former, Pirmez said that the propositions 
 of the United States, taken together, amounted to saying that 
 it was advantageous to employ gold and silver as money simul- 
 taneously everywhere, and with equal freedom of coinage. It 
 was the system of the double standard to its full extent, and 
 Belgium could not do otherwise than reject such a proposi- 
 tion. The double standard, he maintained, had the effect of 
 organizing monetary crises, and, at that moment, the removal 
 of the restrictions in the Latin Union would have the imme- 
 diate result of giving enormous profits to speculators in the 
 metals by enabling them to withdraw gold and replace it with 
 silver. He admitted the gravity of the situation. Xever could 
 more exceptional circumstances have justified a conference, 
 but, by a remarkable coincidence, he said, the extraordinary 
 situation, which so well explained the meeting, seemed des- 
 tined to render it without result, for the force of the economic 
 facts, against which they were invited to struggle, defied every 
 effort. It had been admitted in the discussion that no serious 
 result could be obtained unless all the governments of the 
 world adopted simultaneously an identical relation between 
 gold and silver, for otherwise the depreciated metal would ac- 
 cumulate in the states bound to receive it, and attributing to 
 it a fictitious value. The countries bound by agreement would 
 become a field for speculation for those countries not bound 
 by it. By adopting such a measure, he continued, Germany 
 would have little desire to attend congresses, for she would 
 find her affairs managed better in her absence than she could 
 have ventured to demand if present. He saw no chance of 
 unanimity; the two largest empires of the world would not 
 bind themselves, and in what proportions and with what 
 profits would they not exert their power over the countries 
 which should be given up to their mercy garroted by the in-
 
 216 THE CONFERENCE OF 18T8 
 
 variability of the ratio ? The American delegates had said 
 that their proposition was only a wish, a request to express the 
 idea that the realization of a general understanding would be 
 advantageous; if impossible, it would not be done, but they 
 would at least have indicated the end to be aimed at. " We are 
 thus," said the Belgian delegate, ''very nearly in the position of 
 people who see an extraordinary bird soaring over their heads, 
 but at such a height that their weapons cannot reach it. A 
 question arises. 'It is not within range,' say some, 'let us not 
 trouble ourselves about it.' ' Let us at least decide,' say others, 
 * that we should like to be able to bring it down.' So in this 
 conference," continued Pirmez, " the choice must be between 
 those who keep to the practical view, and those who demand 
 the declaration of a platonic desire." Belgium would favor 
 the former. Governments should pronounce only upon what 
 they could convert into fact. He went further, and denied 
 that the realization of an unanimous agreement of the world 
 would produce the happy results expected from it. It was ex- 
 pected to acquire a monetary calm by letting loose the most vio- 
 lent tempest by fixing a value on all the silver in the world 
 higher than commerce would give it, when governments could 
 not call value into existence. He admitted that a legal fixing 
 of the ratio between gold and silver might give to the latter 
 a value superior to its real value, but claimed that that value 
 would be taken from gold. The sum of the two values would 
 remain the same, the dynamics of values not differing from 
 the dynamics of bodies. Two bodies endowed with dif- 
 ferent motions might be coupled together, and made to assume 
 the same motion, and those who looked only at the body that 
 had moved the more slowly might think there was a gain, but, 
 on looking at both, it would be found that what one had gained 
 the other had lost. If England should make the Indian rupees 
 legal tender at home at 15.50 to 1, he said by way of illustra- 
 tion, they would rise, and the exchange of London on Calcutta
 
 THE DOUBLE STANDARD REGARDED AS A SCIENTIFIC IMPOSSIBILITY 217 
 
 would approach par, but England would be paying for a vain 
 appearance, for what the rupee gained the sovereign would 
 lose. Even if the metals were linked together the link would 
 be of rubber, allowing sufficient play to break the dreamed- 
 of harmony. He doubted if the metals would have the same 
 value in different countries. Gold would disappear from coun- 
 tries where silver was most plentiful, especially the silver-pro- 
 ducing countries. Speculation would withdraw gold from the 
 places where it was worth most, and a fixed par of exchange 
 could not be maintained. He agreed that the substitution of 
 silver for gold might be a long operation, but, if the ratio 
 should be commercially false and it would be false, for it 
 was this very falsity which was to rehabilitate one of the 
 metals gold would gradually withdraw from circulation, 
 finding greater use in industrial and artistic consumption, 
 sought for by those who hoarded, and eventually bringing a 
 premium. This grand alliance of nations, then, after casting 
 monetary relations into an unprecedented crisis, would lead 
 only to complete defeat. He adduced many other arguments 
 against the double standard, and his colleague, Gamier, en- 
 dorsed his statements. 
 
 Belgium, like Switzerland, had been steadfast in its belief 
 in the gold standard for twenty years, and it was not to be 
 expected that the American propositions would find favor in 
 that quarter. But safety required the Belgian government to 
 adhere to the Latin Union, and, if France would have con- 
 sented to bimetallism without restrictions, it would have made 
 little difference what the Belgian delegates thought. As it was, 
 these two states of the Latin LTnion, Belgium and Switzerland, 
 were the strongest advocates of gold monometallism in the 
 conference. Feer-Herzog had been its chief spokesman in mon- 
 etary conferences and out for a dozen years. He devoted very 
 little time to defining his position as a representative of Switzer- 
 land with reference to the American propositions, but he con-
 
 218 THE CONFERENCE OF 1878 
 
 stantly took part in the discussion of incidental questions, and 
 chiefly in reply to statements of the delegates of the United 
 States. The conference was asked, he said, whether the en- 
 tire world should fix an international ratio, and admit silver to 
 unlimited coinage. It was spoken of as the " rehabilitation " 
 of silver, yet in the mind of no one had there been any idea 
 of excluding silver from circulation. It was not that which 
 separated bimetallists from monometallists. Silver would 
 always be a monetary metal, and he considered it better to 
 maintain the existing condition of things, continuing to have 
 here states with the gold standard, there states with the silver 
 standard, and elsewhere states with the double standard. Any 
 attempt to establish an international relation between the two 
 metals he was opposed to. While France, as stated by Presi- 
 dent Say, was awaiting the favorable moment to re-enter the 
 system of the double standard, in Switzerland and Belgium the 
 gold standard was taken as the objective point; but this theo- 
 retical view dividing them, remarked Feer-Iierzog, did not 
 prevent their coming to an understanding in action upon the 
 basis of the treaty of 1865. He believed in the future of gold 
 as sole legal-tender money of unlimited coinage, and in the 
 future of silver as mere fractional coin, because silver was an 
 inferior metal, ill adapted to the needs of higher civilization, 
 inconvenient for private persons, only fit as a standard for 
 backward nations; a metal the value of which had been con- 
 stantly depreciating for four centuries, and which, when main- 
 tained in the rank of legal money by civilized peoples, caused 
 in a certain way the emission of paper money. It was be- 
 cause monometallists wished to assure to the nations the bene- 
 fits and guarantees of a metallic circulation that they rejected 
 the silver standard, behind which they detected the grave 
 abuse of paper money. The possibility of establishing by 
 international agreement a fixed relation of value between the 
 two metals he denied entirely, considering it practically and
 
 ITALY'S EXCEPTIONAL POSITION 219 
 
 materially impossible anywhere to establish a ratio that would 
 not be constantly disturbed by the varying requirements of 
 commerce and the Asiatic world, and also by the variations 
 in the industrial and artistic use of the metals. 
 
 Italy was in a situation differing somewhat from that of 
 other states of the Latin Union. Her currency consisting of in- 
 convertible paper, and her liabilities being heavy, she naturally 
 hesitated to exclude silver, with which she could acquit herself 
 more easily than with gold. Count Rusconi said he would 
 like to see the conference express itself on the question whether 
 it were possible to establish a fixed relation between silver and 
 gold; if it were decided to be possible, then the means to es- 
 tablish such a ratio could be discussed. He did not think bi- 
 metallism offered so many disadvantages that it could be said 
 mankind had made a mistake in the concurrent use of the two 
 metals during the entire course of the ages. Nor did he 
 favor the division of the world into two camps absolutely sep- 
 arated from each other. He had observed with pleasure that 
 no one in the assembly demanded the ostracism of silver; from 
 different points of view its utility as money was recognized, 
 and he thought that all there was to do was to fairly face the 
 fundamental proposition of the United States the deter- 
 mination of a relation. He believed such a relation was prac- 
 ticable, that it would maintain itself in the midst of the fluc- 
 tuations of the market, and that its establishment was not 
 like the squaring of the circle, impossible of solution. A 
 metal was one thing, money was another. Nature made the 
 metal, law alone made the money. " If," he continued, " the 
 uncoined metal is subjected as merchandise to all the accidents 
 of supply and demand, all the variations of the market, the 
 coined metal, being no longer a merchandise, but having legal 
 tender power, has a price which does not vary. In a piece of 
 metal coined according to certain rules as to alloy, impression, 
 size, shape, weight, the law becomes in a manner incarnate. It
 
 220 THE CONFERENCE OF 1878 
 
 gives it the power of paying obligations, a virtue, a price which 
 the metal merchandise could not obtain. Our countrymen 
 would be greatly astonished if they were to be told that the 
 5-franc piece which they laid by in 1873, which they put into 
 a savings-bank or kept in their chests, has in the last five years 
 performed all the somersaults outlined in the very instructive 
 table which the Director of the Administration of Coins and 
 Metals of Paris has kindly communicated to the conference. 
 The metal changes in value, it is true; but as long as the state 
 maintains itself the coin does not change; it has actually and 
 effectively the value which is indicated by its imprint." 
 
 As, in his belief, this conventional relation could exist and 
 endure, Count Rusconi urged that the conference, in establish- 
 ing it by mutual agreement, should thus give another guar- 
 antee, and, perhaps, the most stable of all, to the peace of the 
 world. He had never maintained, he said, that a fixed ratio, 
 in order to be efficient, must be universal, nor did he believe in 
 the necessity nor even the utility in the present state of the 
 world of the universality of the double standard, but he be- 
 lieved that what then existed between several states might 
 exist in the same way, by virtue of the same principle, between 
 a larger number of states; the broader the basis, the greater 
 the stability of the system. The idea of the United States 
 seemed to him feasible, and he regretted that the majority of 
 the conference, judging from another standpoint, seemed in- 
 clined to reject it before sufficiently considering it. The ques- 
 tion was of great importance, in his opinion. Beyond doubt, 
 there were among those represented at the conference some 
 states whose voice had not all the weight desirable, owing 
 to financial difficulties, which various circumstances had caused 
 to weigh upon them, but, if only two or three of the greater 
 commercial nations of the world France and England, for 
 instance should come to an agreement with the United 
 States, the imposing group would soon draw the rest of the
 
 NO DESIRE FOB INTERNATIONALLY 221 
 
 world into its orbit. It would give, he thought, to the bimetal- 
 lic system a basis broad enough to insure the stability of the 
 relation of the two metals, would stimulate their circulation, 
 and facilitate the return of paper-money countries to a metallic 
 circulation. This measure, which, for his own part and as an 
 Italian, he ardently desired, he was afraid of seeing compro- 
 mised by the demonetization of silver or by the maintenance of 
 that metal in a depressed and sickly state, for which, by mere 
 words, no efficacious remedy would be brought. 
 
 Baralis seconded his colleague's remarks by a strong ap- 
 peal for some action, and asked if it were not possible by 
 mutual concessions to create an international coinage. He 
 urged that a committee be appointed to prepare that phase of 
 the subject for consideration, and cited the good results follow- 
 ing the union of four states by the agreement of 1865. A 
 larger number of nations might enter into an agreement which 
 would be mutually advantageous, and might help the situa- 
 tion as to silver. But President Say declared that this was an 
 incidental proposal, and that the question before the confer- 
 ence was the reply to the American propositions, and the con- 
 ference decided that the discussion of those propositions should 
 take its course. 
 
 The French delegates at no time expressed any desire for 
 an international monetary system which eleven years before 
 France had sought so earnestly and skilfully to promote. But 
 that was Xapoleonism, and jSTapoleonism was dead. Another 
 significant point to notice is that while the Italian delegates to 
 the conference of 1867, like those from other states, declared 
 for the gold standard for the purposes of effecting an inter- 
 national agreement, those to the conference of 1878 asked 
 for such a currency to be considered from a bimetallic stand- 
 point and as a means of keeping up the value and use of silver. 
 It is quite possible that Italy's fall to a paper basis had much to 
 do with its change of position.
 
 222 THE CONFERENCE OF 1878 
 
 The delegate from Greece, the remaining state in the 
 Latin Union, stated that his government was in the same atti- 
 tude of expectancy as France, and he could not give his adhe- 
 sion to any resolutions of a nature to create the impression that 
 his government would renounce that attitude. 
 
 The only other bimetallic country represented was Hol- 
 land, where also the coinage of silver had been suspended. 
 Yrolik, who was unavoidably absent, telegraphed to Count 
 Rusconi, of Italy, on the last day of the conference, authorizing 
 him to lay upon the table a copy of the address of the Society 
 of the Netherlands for the Promotion of Industry to the King 
 of Holland in 1876, already noted in these pages. It will be 
 remembered that the address, signed by Yrolik as president of 
 the society, while declaring that under the circumstances the 
 Netherlands ought to abandon silver as a standard, having no 
 other alternative, nevertheless earnestly urged the calling of 
 an international conference with a view to the general adop- 
 tion of the ratio of 15.50 to 1, and the free coinage of both 
 metals, as a remedy for the silver depreciation that threatened 
 injury to the Dutch-Indian colonies. Curiously enough, the 
 American delegates took this address as an endorsement of 
 their position at the conference and an utterance at variance 
 with the position of Mees, the other Dutch delegate. Now 
 Mees was a theoretical bimetallist. He was the only delegate 
 in the conference of 18G7 who questioned the advisability of 
 a general adoption of the gold standard, and the position he 
 took in 1878 was exactly what Vrolik might have been ex- 
 pected to take had he been present, judging from the address 
 he sent for submission to the conference. Mees said he had 
 no instructions which would permit him to vote for the proposi- 
 tions of the United States. So long as England and Germany 
 retained the gold standard it would be impossible for Holland 
 to adopt another system, and his government had instructed 
 him to declare that it could not bind itself internationally in
 
 HOLLAND'S ADVICE TO THE UNITED STATES 223 
 
 this matter, nor could it, under the circumstances, adopt sep- 
 arately any other than the present system. It was not forbid- 
 den him, however, to express his personal opinion, which was 
 that it would be most beneficial to mankind if a large group of 
 states should adopt the double standard; but, while he consid- 
 ered the original idea inspiring the propositions of the United 
 States good and sound, the propositions themselves seemed to 
 him in the existing state of affairs impracticable in Europe, 
 where there remained hardly a state in which the coin- 
 age of silver was free. Mentioning, one after another, every 
 nation, his conclusion was that the only states which might 
 possibly accept the propositions of the United States were 
 those having a paper circulation, but it was the opinion and 
 co-operation of precisely these states, otherwise so important, 
 which could have no practical utility from a monetary point 
 of view. Still he did not think it was necessary to advise the 
 United States to entirely renounce their idea. If there were 
 no chance of finding allies in Europe, it might be different in 
 Central and South America, in China and Japan, and even 
 in the English and Dutch Indies, where the gold standard was 
 adapted neither to the needs of commerce nor to the habits of 
 the people. If after securing these allies they subsequently suc- 
 ceeded in adding to them the European countries, then given 
 over to paper money, the union might be sufficiently vast to 
 enable the legal relation of values to dominate over the nat- 
 ural fluctuations. He considered that the general demonetiza- 
 tion of silver, undertaken everywhere at once, would have the 
 most fatal consequences. 
 
 The suggestion of one of the original bimetallists, of mak- 
 ing allies in South America, Asia, and in European countries 
 given over to irredeemable paper currency, could hardly 
 have been agreeable to the American delegates, when coupled 
 with the assertion of Feer-Herzog that silver was the natural 
 monetary metal of backward nations. If the American nation
 
 234 THE CONFERENCE OF 1878 
 
 was a heavy debtor and still on a paper basis, no nation in 
 Europe exceeded it in resources, and there was no reason for 
 placing it, even by implication, in the list of backward nations, 
 when its securities sold better in the London market than Eng- 
 land's own consols, and when its 4-per-cents. easily 'brought 
 par, though those of Germany were offered at less than 93, and 
 .those of Erance brought no more than 96, while Portugal, a 
 gold-standard country, could not market her bonds at all, except 
 upon the most ruinous terms. The American delegates court- 
 eously refrained from expressing any resentment at the infer- 
 ences to be drawn from these remarks, for they were apparently 
 made without the least purpose of belittling the United States, 
 even though they may have contained a little quiet ridicule of 
 the silver craze of the American people. The European nations 
 were undoubtedly anxious to have something done to keep up 
 the price of silver. The Netherlands had the welfare of her 
 Indian colonies to consider; so had England. The bimetallic 
 states had their stock of silver to protect ; while Germany had 
 a stock to dispose of, and, unless the price was maintained in 
 some way, she could sell it only at a great loss. But the gold 
 nations would not, and the bimetallic nations claimed they 
 could not, do anything for silver themselves; secretly they 
 feared that the United States would not do anything without 
 co-operation. They hoped she would. It was with this idea 
 that the delegate from the Netherlands suggested co-operation 
 with Asia and South America; all the delegates tried not to 
 discourage our government from rendering all the help possi- 
 ble in pulling the chestnuts of their governments out of the 
 fire, and their idea seemed to be that, as silver was largely pro- 
 duced in the United States, the government was in duty bound 
 to assume the burden of maintaining the price, while paying its 
 debts in gold. If Congress had not committed the fatal error of 
 legislating for silver before seeking a conference, thus holding 
 out to Europe a hope inspired by embarrassments of its own,
 
 A POLITE REFUSAL FROM ENGLAND 225 
 
 and also enabling it to find temporary relief in paying for our 
 breadstuffs in our own bonds, the American delegates would 
 have been in a position to have made the European delegates 
 " squirm," and perhaps forced them to some kind of an agree- 
 ment. As it was, the latter could not conceal their anxiety be- 
 neath a disguise of polite indifference, or in the assumed com- 
 placency of an attitude of expectancy. 
 
 England's position was that of a polite and sympathetic 
 refusal to accept the propositions of the United States. Her 
 representatives, said Goschen, were bound by instructions so 
 that they could vote for no proposition compromising the gold 
 standard, and, as this was also the case with the Scandinavian 
 states, and France did not feel free to vote yet for a change 
 in the fixed ratio, or for the free mintage of silver, the United 
 States had really invited the delegates to adopt a proposition 
 which some of them were precluded from entertaining. But, 
 he added, if the proposition were rejected entirely, the rejec- 
 tion might be misinterpreted by the public, and unfortunately 
 regarded as a verdict against silver money. In the text of the 
 x\merican propositions there was a declaration for which almost 
 all the delegates could vote, and to which, as a principle, for 
 his own part, he would willingly subscribe that it was not 
 desirable that silver cease to be one of the money metals. But 
 it appeared that the propositions must be taken as a whole, and 
 they thus incurred opposition and criticism that would not 
 have arisen had the ideas been more clearly separated. 
 
 England intended to maintain her gold standard; Scan- 
 dinavia and Germany were of the same opinion, and France 
 was unwilling to change her ratio. So very little could result 
 from a conference on such propositions, for, though Austria, 
 Italy, and Russia might vote for them as theoretical questions, 
 they could give no practical support because of their forced 
 currency, and a theoretical discussion of the double standard 
 or the advantages of a single standard would, in his judgment, 
 15
 
 226 THE CONFERENCE OF 1878 
 
 be a waste of time. If, however, the question of the double 
 standard were set aside, he thought, another question might 
 fairly be put to the conference, and one of a most practical 
 and useful character. " Assuming," he said, " that the uni- 
 versal double standard preferred by the United States be not 
 adopted, what will be the future of silver? And towards what 
 ends ought all states to work as far as practicable?" The aim, 
 he thought, should be to maintain silver as the ally of gold in 
 all parts of the world where this could be done. A campaign 
 against silver would be extremely dangerous, even for coun- 
 tries with a gold standard. Though England had a gold 
 standard, she had great interest in the maintenance of silver 
 as currency. She had, moreover, in his opinion, a more de- 
 fined and less compromised position for the discussion of this 
 question than other countries, for she had borne the deprecia- 
 tion of silver in India without trying to shut her doors to it. 
 She had done more than any other country, he declared, to 
 maintain silver, had allowed it to take its natural course, while 
 other countries had been shutting their doors ; and the Indian 
 government had suffered a great loss, the merchants from fluct- 
 uations in values, and public functionaries from the deprecia- 
 tion. Had the example of other countries been followed in In- 
 dia, silver might have fallen an additional 10 or 15 per cent. ; so 
 the laisscz faire policy pursued for India had done more 
 than anything else to keep up the value of silver. If, however, 
 other states were to carry on a propaganda in favor of the gold 
 standard and of the demonetization of silver, he feared the 
 Indian government would be obliged to reconsider its position, 
 and to take measures similar to those taken elsewhere. In 
 that case the scramble to get rid of silver might provoke one 
 of the gravest crises ever undergone by commerce. One or 
 two states might demonetize silver without serious results, but 
 if all demonetized there would be no buyers and silver would 
 fall in alarming proportions. Thus, he claimed, all, or
 
 GOSCHEN DECLARES A GENERAL GOLD STANDARD UTOPIAN 227 
 
 nearly all, states were interested in silver. Belgium, for ex- 
 ample, had coined a large quantity of 5-franc pieces, and if 
 the Latin Union came to an end these coins would necessarily 
 flow back to Belgium, which could not then escape the general 
 embarrassment. If all states should resolve on the adoption 
 of the gold standard there would be a fear, on the one hand, 
 of a depreciation of silver, and one, on the other, of a rise in the 
 value of gold and a corresponding fall in the price of com- 
 modities. Italy, Russia, and Austria, whenever they resumed 
 specie payments, would also require metal, and the example of 
 other countries would force them to take gold. Resumption on 
 their part would be greatly facilitated by the maintenance of 
 silver as legal tender in some sections of the world. While, 
 therefore, the American proposal of a universal double stand- 
 ard seemed to him impossible of realization, a veritable Utopia, 
 the theory of a universal gold standard appeared equally Uto- 
 pian, and, indeed, involved a false Utopia. There was a vicious 
 circle ; states were afraid of employing silver on account of the 
 depreciation, and the depreciation continued because the states 
 refused to employ it. As long as the German stock of silver 
 was on the market, he considered that an expectant attitude 
 must be maintained, and it was, he thought, in this direction, 
 renouncing theoretical discussion, that states should use their 
 efforts. When speaking of the advantages of this expectant 
 attitude, he drew no distinction in his own mind between the 
 countries which had prevented the influx of silver by tempo- 
 rary measures and those which, having hitherto left the mint- 
 age entirely free, were still patiently undergoing all the incon- 
 veniences of the depreciation. As to the latter countries, it 
 was impossible for them to enter into engagements of any kind. 
 Their position, however, was very different, and the plan of 
 waiting, which might suit those who had already taken de- 
 fensive measures, might have a quite different effect for those 
 still opposed to all the dangers of the situation.
 
 228 THE CONFERENCE OF 1878 
 
 A little later in the discussion, Goschen said that, viewing 
 the establishment of a fixed ratio between gold and silver as 
 a principle simply, he would not hesitate to affirm the entire 
 and absolute impossibility of it, for many reasons of a scien- 
 tific and economic nature into which he would not enter. The 
 conference might last weeks and months if all the questions 
 connected with money were academically discussed, and he 
 did not think that such was the object of the meeting. 
 
 The response of the Scandinavian states, the only others 
 with a gold standard represented, was hardly as favorable as 
 that of England. They appeared to have no strong interest 
 in the future of silver and no fear of the results of the general 
 adoption of the gold standard. Dr. Broch, of Xorway, said the 
 double standard was almost always an ill-regulated system. 
 In reality there never was a double standard. He recognized 
 that the United States had a great interest in having other 
 countries make equal use of the two metals, for they feared 
 that, if the states still subjected to the regime of paper 
 money resumed specie payments with the single gold standard, 
 it would produce the double consequences of increasing the 
 value of gold and depreciating that of products of every kind. 
 This would, in fact, present disadvantages to the United 
 States from their point of view as a great producing country 
 and as a debtor state. He admitted that, having a heavy debt, 
 a rise of gold would aggravate its weight. But, he observed, 
 on the other hand, with the double standard and unlimited sil- 
 ver coinage, it was also to be feared that everywhere the price 
 of provisions and of the necessaries of life would be considera- 
 bly increased, an evil which he considered more serious, be- 
 cause it reached not only the proprietor and producer, but the 
 mass of consumers, the laborers, petty employes, functiona- 
 ries all who received wages or fixed incomes. Besides, said 
 Dr. Broch, it seemed to be silver's destiny to be always falling. 
 After the discovery of the mines of California and Australia,
 
 SCANDINAVIAN STATES REPUDIATE SILVER 229 
 
 gold fell, and there was an upward movement in silver. But 
 it never commanded a premium of over 2 per cent. Follow- 
 ing the development of the silver mines and the silver demone- 
 tization of Germany, the metal experienced a fall far greater 
 and more permanent. In fact, he believed, silver always went 
 on losing in value with the exception of a few moments of 
 stoppage, or even an accidental rise. The system of the gold 
 standard, in his view, offered great advantages ; gold on ac- 
 count of its greater portability would always have the prefer- 
 ence in our civilization for both the foreign and domestic 
 trade, and it had become the money of all progressive peoples. 
 He considered that it was not so much the lack of metallic 
 currency as the organization of the banks and the deplorable 
 condition of the finances which must be held responsible for the 
 fact that so many nations were still subject to the regime of 
 paper money.. It would require, he believed, much less gold 
 than was generally supposed for Russia, Austria, and Italy to 
 resume specie payments, for experience had shown that it re- 
 quired an amount of gold equal only to its premium over the 
 paper. The sum required by Xorway to adopt the gold stand- 
 ard had been inconsiderable, and it would, in his opinion, be 
 a great exaggeration to say that the total production of gold 
 for ten years would suffice for resumption in the three coun- 
 tries he had mentioned. He then paid a tribute to the United 
 States, praised the jealousy with which they guarded the na- 
 tional credit, and said that, although Europe might differ with 
 them in its opinion on certain questions, the extent of their 
 enormous resources, and the use they made of them through 
 their energy of character, were everywhere admired. As long 
 as they maintained a limit wisely fixed for the coinage of silver 
 money they would, he predicted, be able to keep up the value 
 of the new silver dollars at par with gold, inasmiteh as a large 
 quantity would be demanded for domestic trade. But they 
 would not be able to do so if thev continued to coin silver too
 
 230 THE CONFERENCE OF 1878 
 
 long or if they adopted unlimited coinage. Rather than con- 
 sider the American propositions, he thought it would be better 
 to come to an agreement upon a gold coin which should be 
 legal tender at par in all states having the gold standard or 
 the double standard, and likewise upon a silver coin to be 
 legal tender at par in all states having the silver standard. It 
 would then be for commerce to regulate the relative value of 
 gold and silver. "Waern, the Swedish delegate, endorsed Dr. 
 Broch's position, laying special stress upon the statement that 
 nations with comparatively little wealth could, by good mone- 
 tary laws, good institutions of credit, and prudence in their for- 
 eign commerce, retain sufficient specie for their exchanges 
 and make their paper convertible; biit the richest country 
 could retain neither gold nor silver if its currency laws were 
 bad, the banks mismanaged, and its imports excessive. 
 
 This leaves the attitude of Russia and Austria only to be 
 considered both countries on a silver basis nominally, but 
 in reality having only a currency of inconvertible paper. C. 
 Von Hengelmiiller said the Austro-Hungarian government 
 had given its representatives no authority to bind it, but, in 
 the opinion of that government, the depreciation of silver was 
 greatly to be deplored. In theory it could subscribe to the 
 propositions of the United States, but, unfortunately, the ad- 
 vantages of the double standard depended upon its general 
 adoption, which, in the existing state of affairs, was not to be 
 looked for. So Austria-Hungary was also compelled to main- 
 tain the attitude of expectancy. He feared, however, that 
 the rejection, pure and simple, of the American propositions 
 might be interpreted by the people as a conclusion that there 
 was actually nothing to be done to arrest the fall of silver. 
 If, to avoid this difficulty, the conference desired to formulate 
 its opinions -in a response to the questions proposed, his gov- 
 ernment would take its stand by the side of those pronouncing 
 in favor of the double standard. This declaration was fully
 
 BIMETALLISM RECEIVES BUT LITTLE CORDIAL SUPPORT 231 
 
 endorsed by the other Austrian delegate, Count von Kuefstein, 
 who appeared for the first time at the fourth session. 
 
 The Kussian delegate declared that his government, al- 
 though feeling it necessary to reserve its decision till the 
 time of the resumption of specie payments, had accepted the 
 invitation to the conference in part to respond to the desire 
 of the American government, and in part with the hope of 
 gathering precious material. He was opposed to the double 
 standard, and, to show how antagonistic it was to the nature of 
 things to endeavor to establish a fixed relation between the 
 value of gold and that of silver, he cited the experience of his 
 own country, where, in 187G, the depreciation of silver be- 
 came so great that paper reached a premium of 5 per cent, 
 as to silver, and the government was obliged to suspend the 
 coinage of silver, though not paying in specie. 
 
 Thus from but two of the three governments condemned 
 to the use of inconvertible paper did the bimetallic proposi- 
 tions of the United States secure an endorsement, and Italy 
 was the only state giving them unreserved and cordial sup- 
 port. Of the specie-paying states represented, all either op- 
 posed the bimetallic idea, or assumed the attitude of expect- 
 ancy, which was really the attitude of watchful inactivity 
 contributing to the further decline of silver. Enthusiastic 
 people in the United States had been led to suppose from the 
 earnestness and standing of the European advocates of bi- 
 metallism that a simple proposition for the adoption of a fixed 
 relation between the metals would receive a hearty support. 
 The delegates found the situation altogether different. 
 
 In the discussion, the responsibility for the situation was 
 chiefly and conveniently laid at the doors of Germany, though 
 there was not, even among the gold monometallists, an entire 
 agreement as to the effect upon the price of silver of the Ger- 
 man monetary reform. In fact, it was a much controverted 
 point. The controversy was precipitated by a statement made
 
 232 THE CONFEKENCE OF 1378 
 
 by Goschen that the "temporary and abnormal difficulties 
 were created by the German stock of 15,000,000 of silver." 
 He claimed that it was not the fact of the stock being in exist- 
 ence which depressed prices. If it were in the United States 
 treasury it would not, he held, weigh on the market. The 
 trouble was that it was liable to be dropped on the market as 
 merchandise at any time. President Say expressed the same 
 view, but Feer-Herzog maintained that it was a mistake to re- 
 gard the German monetary reform as the principal cause of the 
 depreciation of silver, or of the instability of its relation to 
 gold. " The centre of gravity of the commercial movement of 
 silver," he said, " is not in Germany; it is not contained in 
 the existence of this stock of silver ready for the market of 
 which a bugbear has been made ; this centre of gravity is in the 
 Indies. Last year [1877], for example, there was an exporta- 
 tion of 16 to 17 million pounds sterling from Europe to the 
 Indies via Suez; in 1876, about 11 millions were sent. During 
 the preceding years, from 1866 to 1875, the exportations had 
 been only a few million pounds sterling, while, on the contrary, 
 from 1860 to 1866 the average export reached 12 millions." 
 He claimed that this changeableness of the Indian trade con- 
 trolled silver in the money market, and was a factor infinitely 
 more important than the German stock, which was almost 
 equivalent to the production of the mines for one year, but no 
 more. He did not think the German stock was dangerous be- 
 cause it was held ready to be thrown on the market, for the 
 government would act with prudence and precaution. The 
 sale was proceeding gradually, while, on account of famine or 
 some great undertaking, India might call for an amount of 
 silver in a single year, as in 1877, equal to the total of the 
 Genn an stock. 
 
 Gibbs, of England, attributed the fall in silver to 
 the simultaneous action of several accidental causes to 
 the excessive yield of the silver mines, to the suspension of
 
 WHAT CAUSED THE DEPRECIATION OF SILVER 233 
 
 mintage in the states of the Latin Union, and chiefly to the 
 demonetization of silver in Germany, by virtue of which that 
 country had become a producer of the white metal, and, unlike 
 normal production, the German silver was a definite mass al- 
 ready in the hands of the vendor. At one time, much in the 
 same way, a large stock of copper in Chili, in addition to the 
 ordinary production, led to a heavy fall in the value of that 
 metal. Feer-Herzog replied that Gibbs was looking at the 
 German stock from the standpoint of the London market, 
 while his own standpoint embraced the entire globe. Dana 
 Horton, who showed himself in the discussion one of the best- 
 informed members of the American delegation, pointedly 
 asked Feer-Herzog if he should continue to discover the causes 
 of the monetary derangement in the demand of India rather 
 than in the supply of Europe if the states of the Latin Union 
 adopted the gold standard and put their silver on the market, 
 the goal at which the Swiss delegate said his government was 
 aiming. Such a demonetization would necessarily put on the 
 market a great mass of silver 5-franc pieces. Feer-Herzog 
 did not refer to the matter again. 
 
 Another point over which there was some difference of 
 opinion was the effect on the price of silver of the suspension 
 of silver coinage in the Latin Union. Gibbs considered it an 
 important influence. Feer-Herzog thought this also a mistake, 
 for no 5-franc pieces were coined at the French mint from 
 1857 to 1865, and that did not prevent the rise of silver. The 
 Latin L r nion did not limit the mintage of 5-franc pieces till 
 the commercial ratio was 16 to 1. Thus, said Feer-Herzog, 
 the fall of silver preceded the measures of restriction; it was 
 the fall which instigated those measures. Goschen submitted 
 that this evidence was not conclusive, and did not exclude 
 the fact that when the right of coinage w r as restricted, that re- 
 striction might, and necessarily must, have contributed in its 
 degree to the fall of silver. When one had in his coffers a sil-
 
 234 THE CONFERENCE OF 1878 
 
 ver ingot which he knew he could immediately convert into 
 money, and of which he knew he could always in that way 
 make an immediate use, that metal had more value than if it 
 could be used only in manufacture, the conditions of which had 
 to be discussed, and the demand for which might have to be 
 long awaited. It followed, said Goschen, that the restrictive 
 measures of the Latin Union had assuredly contributed to the 
 depreciation which other,' anterior, and more active causes had 
 provoked. Fenton spoke of the peculiar conditions affecting 
 silver at the time the Latin Union closed its mints, an act which 
 added to the unprecedented combination of circumstances 
 against silver. Feer-IIerzog said he felt bound to declare 
 plainly that the states of the Latin Union, acting under full 
 responsibility for their proceedings, were entitled at that time 
 to consider their own interests exclusively. Their urgent, im- 
 perative interest lay in guarding themselves against the in- 
 vasion of a metal already depreciated. If the limitation of the 
 mintage had not been decreed, the German monetary reform 
 would have been effected at their expense; all the silver of 
 Germany would have been poured into France, and, not in 
 several years, but in several months, a billion of francs in 
 thalers and florins would have taken the place, over the area 
 of the union, of a billion of gold. By virtue of what principle, 
 he asked, could it be asserted that the states of the Latin 
 Union ought to bear the cost of this operation and alone un- 
 dergo its consequences ? Were the people of England and 
 America in possession of a privilege by virtue of which the 
 monetary system of the Latin Union must be regulated to 
 their advantage, and so as to insure profit to them? Evidently 
 not, he said, any more than the subjects of the Latin Union 
 had a vested right in the monetary systems of England and 
 America. He spoke with much animation, denying that the 
 measures of the union were open to reproach, and the question, 
 which was simply an incidental one, was then dropped.
 
 GENERAL WALKER'S PLEA FOR AN AGREEMENT 235 
 
 The delegates of the United States were not silent while 
 those of foreign countries were declaring their positions and 
 the incidental questions were, being discussed. The regular 
 order of the debate has been departed from for the purpose of 
 presenting at once and more intelligently the attitude of 
 Europe, and it now remains to note the arguments of our rep- 
 resentatives. They presented their case with marked ability, 
 with earnestness and evident sincerity, occupying their full 
 share of the time. They were in a disadvantageous position, 
 having presented propositions which the foreign delegates 
 either opposed as impracticable or illogical, or rejected for the 
 time as impossible, and being compelled to defend their posi- 
 tion without support from any quarter except Italy a coun- 
 try in bad financial circumstances. 
 
 Groesbeck's opening remarks in submitting the proposi- 
 tions were made in the second session. During the fourth, 
 August 22, when the impossibility of securing any practical 
 results was clearly manifest, General Walker set forth in a 
 long address the reasons for the belief in the possibility and 
 efficiency of international bimetallism. He held that the 
 propositions did not raise simply a theoretical question, but, in 
 distinct form and free from the embarrassments of economic 
 theory, a practical question of vast importance to Europe, to 
 America, and to mankind. He combated the idea that the 
 misfortunes of silver were due to the workings of natural law 
 in the following words : 
 
 " Silver has not ceased to be money as the result of natural causes, 
 that is, of economical forces operating upon the choices of individual 
 producers or exchangers. The very suddenness of the change and 
 the violence by which it has been accomplished would suffice to show 
 this, did we not know that the rejection of silver has been effected 
 by action distinctly political, the laws or decrees of government, 
 those laws and decrees having, it is notorious, been suggested and 
 iirged by the political economists of a certain school, incited thereto 
 in no small measure by the recommendations of a conference not 
 wholly unlike the present. I refer to the conference of 1867. 
 
 " We are not, therefore, asking this body to decree the reversal of 
 a law of nature in asking the consideration of the expediency of
 
 236 THE CONFERENCE OP 18T8 
 
 arresting and, so far as practicable, reversing the movement for the 
 demonetization of silver. So far as that movement has proceeded, 
 itiias been wholly a work of man's accomplishing, as it was of man's 
 devising. The action of Germany in 1871 was wholly gratuitous 
 and of choice, not compelled or even suggested by any commercial, 
 industrial, financial, or fiscal stress or exigency. 
 
 " That action, involving important changes in the monetary policy 
 of the Scandinavian kingdoms and of the Latin Union, was, as we 
 conceive, taken under bad advice, with partial or mistaken views 
 of the proper relations of silver to the trade of the civilized nations 
 in their present state of development, and with little or no considera- 
 tion of the broader question as to the effects upon the production of 
 wealth which would be wrought by so great a diminution of the 
 money supply of the world. 
 
 "As the conference of 18G7, wholly absorbed in the consideration 
 of the means of securing international coinage, did incontestably 
 exert a powerful influence in initiating the movement for demone- 
 tizing silver, it remains for the conference of 1878, with a more 
 sober judgment and a larger view of human interests, instructed as 
 the nations have been by the bitter experience of the past few years, 
 to put forth its hand to stay the progress of that demonetization 
 which has already brought such mischiefs upon trade and the pro- 
 duction of wealth. 
 
 " In referring thus to the conference of 18G7, I have no Avish to 
 disparage the object of international coinage. A uniform coinage 
 of money by all civilized nations would offer certain, definite, ap- 
 preciable, but not momentous practical advantages, and would be, 
 moreover, of considerable sentimental importance. It is worth the 
 making a certain sacrifice of national prejudices; it is worth the in- 
 curring a certain definite expense in recoinage, and a certain tem- 
 porary embarrassment of trade, pending the readjustment of mone- 
 tary systems consequent thereon. It is not worth the sacrifice of a 
 single vital interest of mankind, and the conference of 18(57, in 
 proclaiming a crusade against silver for the sake of forwarding the 
 cause of international money, did a mischief whose consequences 
 are even yet only half unfolded." 
 
 General Walker then proceeded to antagonize Feer-IIer- 
 zog's position as to the grouping of the nations in respect to 
 monetary circulation, the civilized states using gold as the sole 
 standard of value, and the uncivilized silver. There were 
 not more than three territorially extensive countries in the 
 world, he said and the experience of Germany showed 
 that she was not one of them which could possibly maintain 
 a single gold standard upon true economic principles. 
 
 " If there is any one thing which political economy declares with 
 an unfaltering voice, it is that the principal money circulating in the 
 hands of the people of any country should be of full metallic value. 
 The coinage of billon, or token money, is indeed admitted by politi- 
 cal economists, but only as applied to what may legitimately and
 
 EVILS OF A DIMINISHED MONEY SUPPLY 237 
 
 strictly be termed the " small change " of trade. To extend the oper- 
 ation of a heavy seigniorage to the main body of the money of a 
 country, what is it but to corrupt the coin and to generate in the 
 public body the morbus numericus of which Copernicus wrote, that it 
 is more fatal than civil war, pestilence, or famine? 
 
 "Better, far, inconvertible paper money than a debased coinage; 
 for the former, at least, does not deceive the sense of the people. If 
 a wrong, it is a wrong confessed and which is always suggestive of 
 its proper remedy. The universal gold monometallism of Europe 
 which has been recommended would, in most countries, amount sim- 
 ply to this: A scanty coinage of gold, held mainly by the banks for 
 the settlement of international obligations, and a vastly preponder- 
 ating circulation of debased silver." 
 
 He maintained that if England, while exacting a heavy 
 seigniorage upon the shilling, florin, and half-crown, so carry- 
 ing the principle of billon to the verge of safety, still main- 
 tained in circulation a large amount of sovereigns and 'half- 
 sovereigns, it was because of her great wealth and rapid circula- 
 tion, and few other countries in Europe could do it. " If," he 
 added, " those nations only are to be called civilized which are 
 prepared to receive gold as their principal money, their sole 
 money of full value, we must, perforce, take a somewhat lower 
 view that we have been wont to do of the progress of man- 
 kind." 
 
 He then entered into an economic argument to show that 
 a fixed relation could be maintained, freeing international ex- 
 change from embarrassment, so that all would gain and no one 
 would lose. But more important, in his view, was the probable 
 effect upon the production of wealth resulting from the diminu- 
 tion of the money supply of Europe and America by the con- 
 tinued demonetization of silver. He said : 
 
 " Cutting, as in the first instance it does to the very quick, into 
 profits of the entrepreneur or man of business, which profits con- 
 stitute the sole motive to production under the modern organization 
 of industry, and enhancing, as in its ultimate operation it must, the 
 burden of all debts and fixed charges, public, private, or corporate 
 which debts and charges are. in effect, the mortgage which the rep- 
 resentatives of past production hold upon the products of current 
 industry a diminution of the money supply is one of the gravest 
 evils which can menace mankind 
 
 "At a time when the production of the two historical money 
 metals, jointly, is diminishing, this most unfortunate occasion is 
 taken to throw one of them out of use as money of full value ; to remit
 
 238 THE CONFERENCE OF 1878 
 
 it to the uses of token money, and to banish what of the accumulated 
 stock of three thousand years' production cannot thus be employed, 
 to be hoarded in the East as treasure or devoted to personal orna- 
 ment. 
 
 "Against so great a wrong to civilization and to the hopes of man- 
 kind the representatives of the United States here present raise 
 their earnest protest and warning. This is our real interest in the 
 silver question. This it is which brings us here." 
 
 The fact that the United States produced silver, he con- 
 tinued, was a consideration so slight in the presence of far- 
 reaching and enduring interests like these that it sank utterly 
 out of view. Xor did the interest of his government arise out 
 of the possession of a stock of silver of which it feared the de- 
 preciation, for it had only a moderate supply of specie, and 
 most of that was gold. " But if we held as large a stock as 
 France or India, we should," he asserted, " in our view of the 
 relations of the money supply to the interests of trade and the 
 production of wealth, look upon the fall of that silver to 45, 
 to 40, or to 30 pence an ounce simply as a net definite loss, once 
 for all, of so much of our accumulated wealth a loss to be 
 made good by increased frugality and industry while we 
 should look upon the reduction of the stock of money by such 
 a cause as an event of vastly greater magnitude, bringing in its 
 train indefinite possibilities of evil, not to us alone, but to the 
 whole world, not in our time only, but through generations to 
 come." 
 
 Feer-IIerzog was the chief -defender of gold monometallism 
 from the sharp assaults of the American delegates. In reply 
 to General Walker he questioned the historical accuracy of 
 the statement that Europe was for two centuries devoted to a 
 silver currency. The truth, he said, was that in Europe, as 
 in the United States, there was a gold and silver currency, with 
 a much larger proportion of gold than of silver, the silver cur- 
 rency being especially that of the less rich and less industrial 
 nations. He thought also that Walker was wrong in criticising 
 the tendencies of the conference of 1867, and called attention 
 to the fact that then the United States showed themselves
 
 FEER-HERZOG'S DEFENSE OF MONOMETALLISM 239 
 
 warm supporters of the gold standard. " It was they who led 
 the campaign in favor of gold," he said. The conference of 
 1867 desired what he now asked for, a division of the world 
 between gold and silver to reserve gold for the civilized, 
 rich, active nations, leaving silver, the inferior metal, to the 
 less advanced peoples, who were content with it, and even pre- 
 ferred it, provisionally retaining the double standard for 
 nations, whose situation debarred them from pronouncing 
 immediately for one metal or the other. He also held, con- 
 trary to the assertions of the American delegates, that the 
 greater part of the perturbations and disasters which had been 
 provoked in great nations had been caused by the double stand- 
 ard. Reviewing briefly the monetary history of England, 
 France, and the United States, he said that the double standard 
 had nearly always been an alternating standard. The system 
 was a necessary speculation at the expense of the people who 
 adopted it for the benefit of people who did not adopt it. He 
 denied that the exclusive gold standard led to the injurious 
 issue of fiduciary money, but reasserted that such was the result 
 of the double standard. Dana Horton took the Swiss delegate 
 to task at this session also, holding that, even if the double 
 standard acted as an alternating standard, neither the suspen- 
 sion nor the entire suppression of one of the two metals oc- 
 curred. It was only the withdrawal into the background of one 
 metal and the prominence of the other, a phenomenon which 
 occasioned less inconvenience than was supposed. 
 
 At the opening of the fifth session Groesbeck made an 
 earnest appeal for an agreement on a fixed ratio, and asserted 
 the futility of the claim that an equilibrium of value between 
 gold and silver could not be maintained, for, he asserted, it had 
 been done. Throughout the entire past up to 1873 both 
 metals had been in equal use as money, and had kept together 
 evenly enough. Now and then, at long intervals, the relation 
 between them had slightly changed, he admitted, but the
 
 240 THE CONFEKENCE OF 1878 
 
 change was easily made and without noticeable inconvenience. 
 Up to the middle of the present century it had never been 
 suggested by any writer or statesman that either of the metals 
 should be generally abandoned because of the difficulty of 
 keeping them sufficiently equalized. This, he said, was the 
 lesson of many centuries, and, theorize as they might, what 
 had been done in the past could be done in the future. He was 
 pleased to note that, in the opinion of the conference, it was 
 not desirable to discontinue the use of silver as legal-tender 
 money. The conference of 1867 had expressed itself in favor 
 of gold alone; that of 1878, he thought, would be more favora- 
 ble to silver, showing some gain in sentiment because of recent 
 economic experiences. He was convinced that a proper use of 
 both metals could not be brought about by such a plan as that 
 of monopolizing the gold for the more advanced nations, and 
 relegating silver to the more backward. Nations, he said, 
 could not come together and divide themselves into two such 
 classes, nor would commerce make such a classification. 
 
 If the fall of silver were prevented, the rich and power- 
 ful nations must do something. The question he would sug- 
 gest, therefore, was whether nothing should be done for the 
 present, or something should be done at once. He argued, for 
 the latter course, the unprecedented conditions of 1874 re- 
 garding silver having changed, there being no silver on the 
 market that could not be taken care of by agreement, except 
 that of Germany. If the yearly production amounted to $72,- 
 000,000, he thought that the East would absorb $30,000,000 
 of it, and the silver states of South America $5,000,000 more. 
 Fully $30,000,000 worth would be required for the industrial 
 arts, and to make up the loss by abrasion. The small balance 
 could easily find a place without disturbance. All that was 
 left was the German stock of, say, $75,000,000. The United 
 States must coin at least $24,000,000 under the new law, and 
 might coin $48,000,000. It would not take long, therefore,
 
 GROESBECK'S APPEAL FOR SILVER 241 
 
 he thought, before the states in the agreement absorbed all the 
 surplus silver and brought it to a parity at a fixed ratio. Re- 
 ferring to the experience of a few years before when the flood 
 of gold came from California and Australia, and some econo- 
 mists began to talk of the demonetization of the yellow metal, 
 ho said : 
 
 " The flood subsided, and what came as a danger remained as a 
 blessing. What if the coinage of gold had been limited or sus- 
 pended at that time? It would have been a great error, resulting 
 in consequences very like to those now upon us. Silver would have 
 been uppermost, and gold, excluded from the mints, would for a 
 time have been only merchandise, for which there would have been 
 but a small demand. Nine hundred millions of gold in six years 
 a production that has had no parallel in all the past. It was wel- 
 comed rather than rejected, and we put upon it the stamp of law 
 and made it money, and so it was saved from depreciation. Seventy- 
 five millions of silver! can we not welcome this also, and put upon 
 it the stamp of law and make it money, and so save it and our own 
 silver from the possible danger of further depreciation? 
 
 " Gold and silver, neither alone, but both equally, have endured 
 a trial of thousands of years, and through all the past it was never 
 suggested that they were too abundant. The first suggestion of 
 such a kind occurred quite recently, when it was recommended that 
 gold should be demonetized because of excessive production. Alas! 
 if it had been done. The second is now to demonetize silver. Alas! 
 if it shall be done. It would almost as soon occur to me to strike 
 into barrenness a part of our wheat-fields because now and then 
 their harvests seemed too plentiful, or to desolate some of our mines 
 of coal, iron, and other minerals, because now and then their yield 
 seemed excessive, as to desolate any of the mines of gold and silver, 
 because now and then their yield happened to be abundant. The 
 more reasonable apprehension is that they may at some time fail. 
 On the other hand, population, labor, trade, commerce, and the end- 
 less activity of life will never fail, but ever increase, and their de- 
 mand for these metals will always utilize their utmost production. 
 How, then, shall both be saved? Not by putting the small and 
 poor and less civilized nations on silver and the great ones upon gold. 
 Far otherwise. They are to be saved by the co-operation and in- 
 fluence of the great and powerful nations. Must all co-operate? It 
 would be better, but it is not necessary. There are enough here in 
 this council to accomplish the result." 
 
 Realizing that the hesitation of France might in some de- 
 gree be caused by the American ratio, he said : 
 
 " We prefer our relation, and I believe if we could all take it to- 
 day it would be better received and secure stronger acquiescence 
 than if we should go to yours. It is not to be overlooked that the 
 tendency has been to a widening, rather than to a narrowing, of the 
 relation. It has been widened more than once, and the time may 
 have come to make another slight change. However that may be, 
 16
 
 242 THE CONFERENCE OF 1878 
 
 what I desire to say in this connection is, that if we can agree upon 
 a plan to restore silver I take it for granted that all who are parties 
 to the agreement should stand upon the same relation. It may be 
 ours; it may be yours. In the absence of such an agreement, we 
 shall, of course, adhere to our present positions, and it is unnecessary 
 to decide which would be the better relation." 
 
 Dana Horton supplemented Groesbeck's earnest appeal for 
 co-operation in a long discourse, citing many historical and 
 statistical facts in favor of co-operate action, and maintaining 
 that the alleged powerlessness of the nations in the existing 
 state of things, of which Feer-Herzog and others had spoken, 
 did not actually exist. It had never entered the thoughts of 
 the American delegates, he said, that the proposed interna- 
 tional relation between the two metals must be adopted by the 
 entire world. The very fact that the East absorbed the greater 
 part of the silver production would facilitate the establish- 
 ment of that " quasi-universal bimetallism " of the Western 
 nations which was the aim of the conference. He furnished 
 many historical reasons for his belief in the success of such a 
 combination, if effected. 
 
 Some of the foreign delegates manifested an impatience 
 over the continuation of the conference after it became ap- 
 parent that no agreement could be reached. As early as the 
 fourth session, President Say remarked that, as each delegate 
 had expressed his opinion upon the propositions, the time had 
 possibly come to form a reply to them, if deemed wise. 
 Goschen could see no reason for lengthening out the debate 
 when there could be no practical result. But the American 
 delegates did not think the limits of the discussion could be 
 fixed in advance. Ex-Senator Eenton submitted that, if the 
 propositions they had offered did not appear acceptable, a com- 
 mittee might be directed to formulate others on which an 
 agreement might be easier. The subject, he urged, was too 
 important to be hurriedly dismissed. In deference to the de- 
 sires of the American delegates, the sessions were continued to 
 enable them to fully present their case. Meanwhile the Eng-
 
 ENGLISH AND FRENCH DELEGATES PREPARE A RESPONSE 243 
 
 lish and French delegates got together privately, framed a 
 reply to the American propositions, and had it ready when the 
 conference met for the sixth session, and Fenton obtained the 
 floor to make the concluding appeal for a forlorn hope. He 
 spoke of the depressed condition of trade and industry and the 
 remedy, as it seemed to him, was some action in harmony with 
 the general aims of the conference. It might not be practica- 
 ble to step forward into formal agreement at once, but, in his 
 judgment, it would be for the interest of all the states repre- 
 sented to make some expression distinctly favorable to that 
 object. According to reliable estimates, there was something 
 over 500,000,000 of silver in circulation in the world. The 
 importance of the relation of this volume of money to the ex- 
 changes and industries of mankind was admitted, he said, and 
 could not well be overstated. He spoke eloquently of the re- 
 sources of his country, of its position in resuming specie pay- 
 ments, but there were difficulties to which he referred as fol- 
 lows : 
 
 " After all, even under these favoring circumstances, it must be 
 confessed that it is hard work to pull up, harder than I could wish. 
 We feel that the case would be made somewhat easier by inter- 
 national co-operation in the fuller use of silver. In the exchanges 
 of trade, in the work of production, in the compensations of labor, 
 and in every business transaction, its freer course is of first impor- 
 tance. Indeed, the question of its free relation with gold as money 
 is closely connected with all the varied and multiplied interests of 
 daily national and international affairs. 
 
 " It is the province of practical statesmanship to secure whatever 
 of beneficent effect may come from the restoration of this metal to 
 an unfettered position. Our people have felt hopeful and bur 
 government has given official expression of the desire that this con- 
 ference would do something to this end, and not only for us, if so 
 much for us, but also for the family of nations. We prefer not, if 
 we could, to stand alone. Our interests are your interests, the in- 
 terests of our respective nations in this respect are practically iden- 
 tical. 
 
 " The representatives of the United States, on behalf of their 
 government, at the outset, at your instance, gentlemen, had the 
 honor to make a brief declaration of the questions for discussion. It 
 was in the spirit of the invitation to you to meet us in council. We 
 felt assured of your approval; if not of just that, of an expression 
 in some form on your part which would lead us to hope for inter- 
 national agreement and co-operation in the not distant hereafter.
 
 244 THE CONFERENCE OF 1878 
 
 I beg you to reassure us in your own words, if not in ours, and we 
 shall not fail to report to our government your sense of regard for its 
 broad views and liberal spirit. In anticipating your decision I do 
 no more than bespeak the action of the eminent representatives of 
 enlightened and progressive nations." 
 
 !^o reply was made to Fenton's remarks, and there the gen- 
 eral discussion closed. President Say suggested an adjourn- 
 ment of the session for three-quarters of an hour " that the del- 
 egates of the European states might agree among themselves 
 as to the collective answer to the propositions." This was done, 
 and, upon reassembling, the American delegates requested that 
 the conference adjourn after the reply was presented till the 
 following day to enable them to agree as to a response to the 
 declaration of the foreign representatives and present observa- 
 tions upon it. Goschen said that the conference should not be 
 uselessly prolonged, but he was disposed to allow the American 
 delegates the delay they requested. So it was decided that the 
 reply framed by the French and English delegates should be 
 at once presented and on the following day discussed. The text 
 of the reply was as follows : 
 
 " The delegates of the European states represented in the confer- 
 ence desire to express their sincere thanks to the government of the 
 United States for having procured an international exchange of opin- 
 ion upon a subject of so much importance as the monetary question. 
 
 " Having maturely considered the proposals of the representa- 
 tives of the United States, they recognize: 
 
 " 1. That it is necessary to maintain in the world the monetary 
 functions of silver, as well as those of gold, but that the selection 
 for use of one or the other of the two metals, or of both simulta- 
 neously, should be governed by the special position of each state 
 or group of states. 
 
 " 2. That the question of the restriction of the coinage of silver 
 should equally be left to the discretion of each state or group of 
 states, according to the particular circumstances in which they may 
 find themselves placed; and the more so, in that the disturbance pro- 
 duced during the recent years in the silver market has variously af- 
 fected the monetary situation of the several countries. 
 
 " 3. That the differences of opinion which have appeared, and 
 the fact that even some of the states, which have the double stand- 
 ard, find it impossible to enter into a mutual engagement with re- 
 gard to the free coinage of silver, exclude the discussion of the 
 adoption of a common ratio between the two metals." 
 
 This reply was but briefly discussed at the seventh and the
 
 NATURE OF EUROPE'S REPLY 245 
 
 last session. Gamier, a Belgian delegate, made some pleasant 
 remarks about the brilliant qualities of the American delegates 
 in debate, and said that the frankness with which they had 
 given their views demanded that the response should be equally 
 clear. He accepted its terms, as framed, for himself and his 
 colleague, who, he claimed, had demonstrated the impossibility 
 of a fixed relation between gold and silver. Count von Kuef- 
 stein, speaking for Austria, said that he had no objection to 
 the proposed response, as it was a declaration entirely theoreti- 
 cal, leaving to all states a freedom which they never intended 
 to limit in participating in the conference, and by virtue of 
 which they could each separately take such measures as they 
 pleased in monetary matters, or, if they desired, could ally 
 themselves at any time with other countries, or again set on 
 foot a new international investigation. Goschen said that, as 
 the response in no way attacked the single gold standard, the 
 English delegates were free to adopt it. It would be impossi- 
 ble for them to support any declaration in favor of the double 
 standard. If in his previous remarks he had affirmed that silver 
 ought to be an ally and partner of gold, he by no means in- 
 tended to say that the two metals ought both conjointly to be 
 placed upon the same footing and become legal tender in all 
 countries. He had merely desired to combat the theory of the 
 economists who demanded the universal adoption of the single 
 gold standard a measure which, in his view, might be the 
 cause of the greatest disasters. " I maintain my assertions in 
 this connection absolutely," he said. " I believe it would be a 
 great, misfortune if a propaganda against silver should suc- 
 ceed, and I protest against the theory according to which this 
 metal must be excluded from the monetary systems of the 
 world." Feer-Herzog shared in the views of the delegates of 
 England and Belgium, as to the appropriateness of the re- 
 sponse. 
 
 Thoerner, speaking for Russia, declared that he accepted
 
 246 THE CONFERENCE OF 1878 
 
 the draft proposed in the narrow sense, nothing being inferred 
 from it except what was actually there. He wished to guard 
 against any interpretation of it in the sense of veiled adhesion 
 to the system of the double standard to which Russian public 
 opinion was decidedly opposed. Count von Kuefstein rose 
 again to say that, from the explanations given, it might be in- 
 ferred that the declaration implied an admission of the im- 
 possibility of an international arrangement for the double 
 standard. He therefore felt obliged to declare, for his part, 
 that if he adhered to the formula it was precisely because, 
 in his view, it did not exclude the idea that such an arrange- 
 ment was possible. 
 
 The different interpretations which were thus made to jus- 
 tify the acceptance of the response showed that it had been 
 skilfully drawn to be non-committal and indefinite. The early 
 remark of the Belgian delegate as to its clearness was spoiled 
 by these evidences of the elasticity of its meaning. Austria, 
 which announced that it would take the side of bimetallism 
 in theory, and Switzerland, whose delegate denied the possi- 
 bility of bimetallism, even in theory, could both accept it. 
 
 The only objection to it came from Italy. Count Rusconi 
 said he could not accept its "terms, for the object of the con- 
 ference was to study the means of establishing a fixed relation 
 between the value of the two metals, and the proposed declara- 
 tion did not respond to this object. It seemed to him that, in 
 drafting it, special care had been taken to avoid anything that 
 might give rise to a hope, even the most vague, of a future un- 
 derstanding. " It is," he said, " limited to a statement that 
 each one will continue to do at home everything he pleases. 
 It is true, a recognition is made that silver has a monetary 
 function to perform in the world. But what value can this 
 declaration have ? Did it depend upon a conference to ascer- 
 tain such a fact as this? " It appeared to him that to reach 
 such a result it was hardly necessary that almost all the states
 
 ITALY ALONE DISSENTS 247 
 
 of Europe should have made haste to accept the invitation of 
 the United States, and he was, therefore, compelled to embody 
 his opinion and that of his colleague in the following: 
 
 " 1. That by the adoption of the formula proposed the conference 
 does not respond to the question which was put to it, and that in 
 systematically avoiding to pronounce itself upon the possibility or 
 impossibility of a fixed relation to be established by way of Interna- 
 tional treaty between coins of gold and of silver it leaves its task 
 unfinished. 
 
 " 2. That since the French law established such a relation be- 
 tween the two metals, the oscillations of their relative value had 
 been without importance, whatever had been the production of the 
 mines. 
 
 " 3. That consequently, a fortiori, if the law of France had been 
 alone able to accomplish the result, the day when France, England, 
 and the United States, by international legislation, should agree to 
 established together the relation of value of the two metals, this rela- 
 tion would be established upon a basis so solid as to become un- 
 shakable." 
 
 General Walker then read the following in behalf of the 
 American delegates: 
 
 " In response to the address of the representatives of the Euro- 
 pean states, the representatives of the United States desire, on their 
 part, to express their sincere thanks to the European states for ac- 
 cepting their invitation and consulting with them upon a subject of 
 so much importance. 
 
 " The representatives of the United States regret that they cannot 
 entirely concur in all that has been submitted to them by a majority 
 of the representatives of the European states. 
 
 " They fully concur in a part of the first proposition, viz.: that ' It 
 is necessary to maintain in the world the monetary functions of silver 
 as well as those of gold,' and they desire that ere long there may be 
 adequate co-operation to obtain that result. They cannot object 
 to the statement that ' the selection for use of one or the other of 
 these two metals, or of both simultaneously, should be governed by 
 the special position of each state '; but if it be necessary to maintain 
 the monetary functions of both metals, as previously declared, they 
 respectfully submit that special positions of states may become of 
 but secondary importance. 
 
 " From so much of the second proposition as assigns as a special 
 reason for at present restricting the coinage of silver, ' that the 
 disturbance produced during the recent years in the silver market 
 has differently affected the monetary situation of the several coun- 
 tries,' they respectfully dissent, believing that, a policy of action 
 would remove the disturbance that produced these inequalities. 
 
 " In regard to the third and last proposition, they admit that 
 ' some of the states which have the double standard.' or, as they pre- 
 fer to say, use both metals, ' find it impossible to enter into a mutual 
 engagement for the free coinage of silver.' They, as representa- 
 tives of the United States, have come here expressly to enter into
 
 248 THE CONFERENCE OP 1878 
 
 such an engagement. The difflculy is not with them; and, wherever 
 it may be, they trust it may be soon removed. 
 
 " They entirely concur in the conclusion drawn from this state 
 of the case, that ' it excludes the discussion of the question of the 
 adoption of a common ratio between the two metals.' It is use- 
 less to agree upon a particular ratio between the two metals if the 
 nations are not ready also to adopt a policy to uphold it. We re- 
 main upon ours, the European states upon theirs." 
 
 No one expressed any desire to further prolong the discus- 
 sion, and thus, on August 29, after seven sessions, the confer- 
 ence of 1878 adjourned. While apparently nothing of a prac- 
 tical nature resulted, the cause of the exclusive gold standard 
 was, nevertheless, appreciably weakened, and that of bimetal- 
 lism somewhat, if not correspondingly increased. The attitude 
 of the nations was very different from that taken in 1867, when 
 all were for the gold basis, and only a Dutch delegate had mis- 
 givings as to the economic effects of its general adoption. No 
 delegate in 1867 favored a double standard, or considered it 
 economically possible. In 1878, only the delegates of Bel- 
 gium and the Scandinavian states considered the general adop- 
 tion of the gold standard as either desirable or possible. Eng- 
 land regarded it as Utopian, Switzerland admitted that only 
 advanced nations could afford it, while France, Holland, and 
 Austria, though deeming the adoption of bimetallism imprac- 
 ticable then, favored it as the object to be sought in the future. 
 The United States and Italy desired its immediate adoptioa 
 This was undoubtedly a distinct gain. 
 
 The economic results of the artificially created demand for 
 gold had not yet manifested themselves so appreciably as to 
 suggest all of the arguments for international bimetallism. 
 The fall in prices was yet largely theoretical. Statistics were 
 incomplete, and the few attempts made in the conference to de- 
 monstrate the fall were inconclusive. But the leading advo- 
 cates of gold discarded their argument of a few years before 
 concerning the ample supply of gold. The impossibility of 
 maintaining it had been demonstrated by some unpleasant ex-
 
 TUB FAILURE OF TUB CONFERENCE 249 
 
 perienccs in the banks of issue, and it was, therefore, necessary 
 to make more of the argument for the division of the world 
 into groups according to their commercial development an 
 argument incapable of enduring close scrutiny. 
 
 The two serious obstacles to the accomplishment of def- 
 inite results in the conference were the non-participation of 
 Germany and the uncertainty as to the future course of 
 events in the United States. Their legitimate offspring was 
 the " attitude of expectancy." With German silver in the 
 market, the Latin Union could not reopen its mints, and in all 
 probability it would not care to do so, should the United States 
 freely open theirs, either independently or in co-operation with 
 governments outside of Europe, for it would never consent to 
 the adoption of the American ratio and recoin its enormous 
 mass of silver; nor could it reopen its mints without adopting 
 the American ratio, for, there being 3 per cent, difference, all 
 the silver would have gone to the Latin Union for coinage, and 
 its gold would have gone to the United States and Germany. 
 With Europe in this attitude all negotiations were useless.
 
 CHAPTER VI 
 
 SERIOUS LOSS OF GOLD BY EUROPEAN BANKS OF ISSUE THE CONFER- 
 ENCE OF 1881 
 
 THE failure of the conference was a great disappointment 
 to the American delegates, whose expectations had been un- 
 reasonably high, but it was evidently due, in a large measure, 
 to the legislative blunder of February, 1878 the law which 
 created them and provided for the conference. Leaving the 
 future welfare of bimetallism out of the question, and consider- 
 ing that act simply as legislation for domestic ends, it could 
 not be called a blunder, for, although, as a means of providing 
 a subsidiary silver currency it was wrong in principle, and, 
 therefore, dangerous if persisted in, its immediate effects were 
 helpful to business, and even to successful resumption. But 
 it was a blunder from a bimetallic standpoint, not so egregious 
 as the free coinage of silver would have been under the cir- 
 cumstances, but serious enough to place the European nations 
 in an attitude of expectancy the expectation of possible 
 relief or safe escape through silver coinage in the United 
 States from their own situation of increasing embarrassment. 
 What made this blunder all the more deplorable from a bi- 
 metallic standpoint was the fact that the prospects of an in- 
 ternational agreement decreased in the proportion that the 
 United States coined silver at the ratio of 16 to 1, thereby in- 
 creasing the difficulty of recoinage, inevitable in such an agree- 
 ment. 
 
 Hardly had the conference of 1878 closed when the Euro- 
 pean governments began to be seriously alarmed over a diffi-
 
 LOW RESERVE IN THE BANK OP ENGLAND 251 
 
 culty to acquire and to keep gold in the banks of issue. They 
 were painfully aware that, under prevailing commercial condi- 
 tions, a succession t)f bad harvests at home and of good ones 
 in America would necessitate large payments to us in gold, 
 unless they could increase their exports of merckandise, or 
 we gave them the privilege of paying us in their silver. Our 
 tariff being protective, and our developing manufactures sup- 
 plying more and more of our needs, Europe was discovering 
 that its payments for breadstuffs presented a serious problem. 
 For some time the leading banks had been compelled to main- 
 tain high rates of discount to keep their reserves intact. Money 
 was generally abundant, but business was dull, a state of things 
 which naturally would tend to the accumulation of specie in 
 the banks. 
 
 At the time of the adjournment of the conference, the re- 
 serve in the Bank of England stood at 8,603,000, but Octo- 
 ber, and not August, was the usual month for low reserves. 
 The average for August and 'October for each year from 1871 
 to 1877, inclusive, had been as follows: 
 
 1871, 
 
 1872, 
 1873, 
 1874, 
 1875. 
 1870. 
 1877, 
 
 The bank was not, therefore, in a good condition to meet 
 the later demand, but by maintaining a discount rate of 5 
 , per cent., it succeeded for a time in preventing a further de- 
 pletion. During the autumn, the price of certain railroad 
 stocks largely held in England, notably the Erie, advanced 
 rapidly in New York under the influence of a speculative fever, 
 and foreign investors made heavy sales to realize the profits. 
 This helped England to balance accounts, and enabled the 
 bank to maintain its reserve until the tide turned, but even 
 
 August. 
 15,186,000 
 
 October. 
 9,467,000 
 
 12,139.000 
 13,005,000 
 
 8,618,000 
 9,573.000 
 
 10,672,000 
 15,696,000 
 20,362,000 
 12,293,000 
 
 9,812,000 
 10,987,000 
 16,290,000 
 9,589,000
 
 252 THE CONFERENCE OF 1881 
 
 then it attracted only moderate amounts from abroad. The 
 B ullionist, in an article on the state of trade, said: 
 
 " Of late we have had a very sharp reminder, in our inability to 
 attract gold to our shores, that an ounce of fact is more potent than 
 a pound of theory. At a time when money here has grown rapidly 
 dearer and- is double in value what it is in some other European 
 centres, we find ourselves unable to bring here the supply of capital 
 of which we so greatly stand in need. The truth is, our indebtedness 
 to other countries has assumed such large proportions that we are no 
 longer in a position to command supplies of gold as we once could." 
 
 An article in the treaty of the Latin Union of 1865 pro- 
 vided that if notice of dissolution were not given before Janu- 
 ary 1, 1879, the treaty should remain in force for fifteen years, 
 from January 1, 1880. A large party in France had for some 
 time considered the union disadvantageous to their country, 
 as the silver from the other states worked its way into French 
 provinces, and, finally, into the reserves of the bank. Nearly 
 all the silver coined in Italy quickly passed into France, and 
 the government determined to bring the question of the dis- 
 solution of the union before the plenipotentiaries of the differ- 
 ent states. A conference was called and assembled at Paris 
 late in October. The smaller states were strongly opposed to 
 the dissolution, realizing that they might be required to re- 
 deem their exported silver coins, and they also objected to any 
 definite arrangement for the redemption of their coins while 
 the union was continued, though strongly urged by France to 
 do so. An agreement was finally reached on a new treaty, 
 continuing the union in all that related to the fineness, weight, 
 denomination, and currency of the gold and silver coins, but 
 providing for the suspension of the coinage of silver 5-franc 
 pieces to be resumed only upon a unanimous agreement of the 
 states. The treaty was to remain in force but eight years. 
 France was thus left to bear the burden of the depreciation of 
 silver; Belgium and Switzerland, which had urged the adop- 
 tion of the gold standard in conferences, being unwilling to 
 effect the speedy redemption of their own silver issues, and 
 Italy being unable to do so.
 
 ALL EUROPEAN MINTS CLOSED TO SILVER 353 
 
 Meanwhile the finances of the German empire were far 
 from satisfactory. The Reichsbank, desperately holding to its 
 gold, kept its rate of discount at 5 per cent, during 1878, and 
 by selling silver accumulated a large amount of gold for the 
 government. But every sale occasioned a heavy loss to the im- 
 perial treasury. It was reported in February, 1879, that the 
 deficit in the imperial revenues amounted to 70,000,000 marks, 
 and the Prussian deficit was 78,000,000 more. This was in 
 strong contrast to the United States, which were paying off 
 their debt rapidly, selling abroad more than they purchased 
 and accumulating a surplus. A sentiment antagonistic to the 
 monetary reform began to manifest itself all over the empire. 
 In March the Berlin Borsen-Zcitwiy urged the government 
 to coin into small change 5,000,000 of the old silver on hand, 
 which, it said, was one-half of the amount still to be withdrawn 
 from circulation, on the ground that it would prevent a great 
 loss to the government without interfering with the plan of 
 currency reform. Silver was then quoted at 49(Z. 
 
 The only European mints remaining open to silver at this 
 time were those of Austria-Hungary. During the latter part 
 of 1878 and the first quarter of 1879 the imports of silver into 
 that empire were very large, and, as the low price of the metal 
 made it profitable to send it to the mints of Vienna and Krem- 
 nitz, private persons availed themselves of the opportunity 
 very extensively. As the coins flowed out from the mints, 
 and as the price of silver fell, the premium on the metal grad- 
 ually decreased and finally disappeared. It would have been 
 easy then for the government to have resumed specie pay- 
 ments on a silver basis, and it was advised to do so. But it re- 
 fused, and discontinued the coinage of silver instead, con- 
 sidering gold indispensable for specie payments in the existing 
 attitude of Europe. Thus, by March, 1879, silver was de- 
 barred from every mint in Europe, where six years before, in 
 1873, it was coined to the value of about $90,000,000. The
 
 254 THE CONFERENCE OF 1881 
 
 price of silver at once fell to 48d. Every point it fell added 
 to the difficulties of the other countries England through 
 Indian exchange, France through depreciation of the currency 
 of its people and the reserves of its bank, Germany by adding 
 to the loss of every ounce it sold, as well as to the depreciation 
 of every thaler it was compelled to keep. 
 
 Even before this drop the commercial boards of London 
 had been studying the problem of advancing the price of sil- 
 ver in the interests of India and of themselves. Late in 
 February, 1879, a memorial was prepared and extensively 
 signed by merchants and bankers trading with the East, pro- 
 posing a plan for relief. It recognized as among the causes 
 of the decline in the price of silver the extensive drawing of 
 India council bills, and suggested that the causes of the de- 
 cline might be greatly mitigated by reducing the drawings, say 
 5,000,000 per annum for each of two years, and by borrow- 
 ing temporarily in England an equal amount (10,000,000) to 
 provide for the requirements of the Indian government. It 
 was held that the immediate effect of the measure would be to 
 raise the exchanges, relieve the market from the incubus of the 
 German supply of silver, and consequently of the loss occa- 
 sioned by the drawings, while later, with a revival of trade, 
 the loan could be repaid from India by a slight increase of the 
 yearly drawings of council bills. The memorialists figured 
 the salable stock of German silver at 10,000,000, and seem 
 to have had the impression that a reduction of the India draw- 
 ings to that amount would restore the normal conditions. The 
 government considered the project favorably, and on March 
 28 a bill was introduced into Parliament asking for authority 
 to borrow the amount, instead of drawing council bills, which 
 were at 20 per cent, discount, and, therefore, imposing a heavy 
 burden on the Indian government. The price of silver ad- 
 vancing a little on the strength of this, Germany at once 
 dropped half a million dollars' worth on the market.
 
 INCREASED DEPRESSION IN TRADE 255 
 
 On account of the continued distress in India, great press- 
 ure was brought upon the government to take other steps to 
 enhance the value of silver. On April 4 a deputation from 
 one of the most influential bodies in England, the Liverpool 
 Chamber of Commerce, waited upon the Chancellor of the 
 Exchequer, and urged the adoption of measures to that end. 
 There was a very uneasy feeling about some of the banks en- 
 gaged in Eastern transactions. The stock of the Chartered 
 Bank of India and Australia had fallen 25 per cent. ; the Hong- 
 Kong and Shanghai stock had depreciated 33 per cent., while 
 stocks of some institutions had fared still worse. The old Ori- 
 ental, the par value of whose shares was 20, and the market 
 value of which, in its prosperous days, had ruled above 45, 
 was quoted in April at 14^, a reduction of more than 75 per 
 cent. The president of the Chartered Bank of India made a 
 statement to the effect that, a year before, the bank had been 
 informed from America, that a very considerable rise in silver 
 was imminent on account of the passage of the Bland Bill, and 
 it was thought advisable to make a large purchase. The bank 
 lost 45,000 by the operation. 
 
 Meanwhile the general depression in trade was becoming 
 more intense, and the effect was felt nowhere so keenly as in 
 England. The United States were prosperous, and France 
 was fairly so, but elsewhere in Europe industries were in a 
 very low state. It caused money to be cheap, and enabled the 
 Bank of England to replenish its reserve, so that its rate fell 
 to 2 1, and that of the Reichsbank was dropped for a time to 
 3 per cent. But in other respects the business conditions 
 weighed heavily. " That the country is in a state of indus- 
 trial depression seldom equalled is what Her Majesty's govern- 
 ment do not deny," said Disraeli, the Prime Minister, one April 
 evening in the House of Lords. The results of the failure of 
 the City of Glasgow Bank and of the "West of England Bank 
 were proving serious on the shares of all banks; the shrinkage
 
 256 THE CONFERENCE OF 1881 
 
 in the value of bank shares in England and Scotland was esti- 
 mated to aggregate 34,444,000. The foreign trade of the 
 United Kingdom offered no compensating encouragement. 
 England was suffering severely, and the number of those who 
 considered the decline of silver as the prime cause of the 
 trouble was rapidly increasing. This was an appropriate time 
 for Congress, in the interests of silver, to allow the United 
 States quietly to reap the fruits of their prosperity, and let 
 Europe solve the problems of its unpleasant situation in the 
 light of the possibilities of bimetallism. But by a curious 
 fatality, often exemplified later, it was the time taken by one 
 branch of Congress to pass a bill for the free coinage of sil- 
 ver. The Forty-sixth Congress began its career with an extra 
 session, March 18. 1 A. J. Warner, of Ohio, at once introduced 
 a bill amending the statutes so as to provide for free coinage, 
 and it was referred to the coinage committee, of which he was a 
 member. He reported it on the 30th of April, and after a 
 stubborn resistance it was passed on May 24, by 114 yeas to 
 97 nays. All those voting for the bill were Democrats and 
 Greenbackers except four; all voting against it were Republi- 
 cans except eight. It went to the Senate, and was referred to 
 the Finance Committee, of which Senator Bayard was chair- 
 man. 
 
 This had its natural effect in Europe, in its attitude of ex- 
 pectancy. Germany at once discontinued its sales of silver, 
 though the price was ruling somewhat higher than at the time 
 of some of her sales. She deemed it best to wait for the 
 American mints to open. Up to this time Germany had with- 
 drawn from circulation about 1,000,000,000 marks in old 
 coins of the several states. Of this, 380,000,000 marks had 
 been delivered to the mints for coinage into new imperial silver 
 coins, and the remainder had been melted into bars producing 
 
 i " For the first time since the Congress that was chosen with Mr. 
 Buchanan in 1S."0, the Democratic party was in control of both 
 branches." Elaine's Twenty Years of Congress.
 
 PROGRESS OP GERMAN MONETARY REFORM 257 
 
 7,474,644 pounds of fine silver. Of this, 7,104,896 pounds 
 had been sold at prices varying from 59fyd. in 1873, to 50(Z. 
 in 1879, the average being 53ff<7. By a comparison of 
 the product of these sales, 567,139,993 marks, with the orig- 
 inal cost of the silver, which had been taken at 663,621,109 
 marks, it is apparent that Germany made her sales at a loss to 
 the empire of 96,481,136 marks, or about $23,000,000. In 
 addition to this, the expenses of carrying out the monetary re- 
 form (coinage, interest on the capital employed in running 
 the workshops of the mints etc.) were reckoned at 29,316,438 
 marks, making the total expense 125,797,574 marks. Against 
 this the government reckoned profits from the mintage of the 
 gold and silver imperial coins, bonuses, etc., of 81,728,134 
 marks, leaving a balance to be met by the imperial treasury for 
 the six years' operations of 44,069,440, or about two-thirds of 
 the imperial deficit reported in March. But there were still. 
 
 left in circulation old silver thalers and Austrian thalers to 
 
 > 
 
 the amount of about 450,000,000 marks. The plan of the 
 reform as originally laid out included the retirement and de- 
 monetization of these coins, but when the sales stopped only 
 614,000,000 marks of the total had been called in. 1 The old 
 silver, still in circulation at full legal tender, therefore, still 
 exceeded the new imperial silver coinage, which was legal ten- 
 der to only 20 marks between individuals. It was evident to 
 the government that the reform could not be completed on a 
 declining silver market without a further net loss of at least 
 40,000,000 marks. In this situation Germany could not fail 
 to pause and regard with hopeful expectancy the results of 
 the passage of another free silver bill in the House of Repre- 
 sentatives at Washington. 
 
 France and England watched events in Congress with quite 
 
 i These fijrnres are taken from the statement made by Baron Von 
 Thielmann, the German delegate to the conference of 1881. and 
 were from official German sources. 
 
 17
 
 258 THE CONFERENCE OF 1881 
 
 as much interest. "Writing from London on May 24, the day 
 the bill passed the House, the foreign agent of our Treasury 
 Department in our refunding operations said: 
 
 " There is quite a large class of merchants and manufacturers here 
 who are interested in India, who wish us to adopt the extreme 
 measures of the silver inflationists, and France would be only too 
 glad to have us adopt free coinage. It would open up a way for 
 her to escape from the difficulties and embarrassments she now 
 finds herself in through her membership with the Latin Union. 
 Italy has coined vast sums of small silver coins, and has used them 
 in the payment of the interest on her debt; in fact, it is. believed 
 they were partly, if not wholly, coined for that purpose. France is 
 flooded with silver which has found its way there from the several 
 states of the Latin Union, and every visitor to Paris during the last 
 two years will testify to the general complaints of the abundance of 
 silver. Its circulation is forced. Traders and small retail dealers 
 make every exertion to force it upon their customers in returning 
 change. People were greatly surprised and astonished a few days 
 ago by the announcement that of the 87,872,000 which the Bank 
 of France reported as cash assets, over 40,000,000 of it was in silver 
 coin The solution of the silver question is a difficult prob- 
 lem for France. If our people wish to take upon their shoulders the 
 burdens of India, Italy, France, and some of the poorer states, they 
 can do it by establishing free coinage in the United States." 
 
 Mr. Evarts, the Secretary of State, was favorable to the 
 calling of another international conference, but the plan was 
 not considered expedient so soon after the conference of the 
 year before. It was, however, much discussed by the admin- 
 istration, and a close watch was kept on events abroad. Little 
 pertaining to the situation was transpiring then, except the 
 debates in Parliament on the continual deficits in the Indian 
 budget, and the increasing industrial depression at home. A 
 Royal Commission was appointed to investigate the matter. 
 The French government was discussing the expediency of re- 
 coining silver into trade pieces to be used in Cochin-China, 
 and a similar proposition was under consideration by the Ger- 
 man Federal Council as a means of working off some of the old 
 silver. 
 
 On June 17, while the Free Silver Bill was still in the 
 hands of the Finance Committee of the Senate, Senator Vest 
 introduced a resolution " that the complete remonetization
 
 EFFECT OF SHORT CROPS IN EUROPE 259 
 
 of silver, its full restoration as a money metal, and its free 
 coinage by the mints of the United States are demanded alike 
 by the dictates of justice and wise statesmanship." It was 
 referred to the Finance Committee by a vote of 23 to 22, and 
 was not again heard of; but just before the adjournment of the 
 session on July 1, the Finance Committee reported adversely 
 on the Free Silver Bill, and it was, therefore, killed for the 
 time, thus destroying the immediate hopes of the distressed 
 European states. 
 
 During the summer a gloom settled down on their finan- 
 cial affairs. The harvests were again inadequate, and, in Eng- 
 land, were almost a failure. A large importation of wheat 
 from the United States seemed inevitable, and the question 
 of how it should be paid for attracted considerable attention. 
 Most of our bonds remaining abroad were held as permanent 
 investments; payments for grain could not, therefore, be 
 made, as in the two previous years, by the mutual surrender 
 of our securities on the market. Some encouragement was de- 
 rived from the argument that the prosperity of the United 
 States would soon so raise wages, and thereby so increase the 
 cost of our manufactured productions, as to largely remove 
 competition with the manufactures of Europe, even with our 
 high tariff. This argument contains some food for thought 
 for those who are wont to deny that a protective tariff does 
 not aid us in the maintenance of a gold reserve, and, therefore, 
 assist in preserving the redemptive features of our currency. 
 
 The movement of gold from London and Paris to ISTew 
 York began early in August. The Bank of England was in a 
 better position than in 1878, having accumulated a comfort- 
 able stock of gold in various ways; but the Bank of France 
 was seriously embarrassed, not so much by a lack of gold, as 
 by a disproportionate amount of silver. The following table 
 shows the change that had gradually been taking place in its 
 bullion since 1874:
 
 Gold. 
 
 Silver. 
 
 Total. 
 
 40,484,000 
 
 12,528,000 
 
 53,012,000 
 
 46,972,000 
 
 20,200,000 
 
 67,172,000 
 
 61,216,000 
 
 25,544,000 
 
 86,760,000 
 
 47,084,000 
 
 34,616,000 
 
 81,700,000 
 
 39,344,000 
 
 42,324,000 
 
 81,668,000 
 
 260 THE CONFERENCE OF 1881 
 
 1874, 
 
 1875, 
 1876, 
 
 1877, 
 1878, . 
 
 The amount of silver in the autumn of 1879 was about 
 the same as that of 1878, but the stock of gold was rapidly 
 falling, and, while larger than that in the Bank of England, 
 the notes of the former were issued against both the gold and 
 silver, and of the latter only against gold. The situation 
 caused the French government much uneasiness, and its at- 
 titude was rapidly changing from that of expectancy to one 
 of determination to act. It began to sound the American 
 government on the subject of another conference. A few 
 months had changed its ideas as to the premature character 
 of the propositions made to the last conference. Had the 
 Bland-Allison Act not been in operation then, our business 
 activity would have created a sharp demand for gold in our 
 currency, and made international bimetallism an immediate 
 probability. 
 
 An event of much significance occurred in England about 
 this time. Henry H. Gibbs, an ex-governor and one of the 
 directors of the Bank of England, who had maintained the 
 gold monometallic position of his government at the confer- 
 ence of 1878, announced his conversion to bimetallism in an 
 ably written pamphlet published with the sanction of the 
 governor of the bank. He affirmed the superiority of the bi- 
 metallic system to the English system, and strongly advocated 
 a general restoration of the free coinage of silver. This was 
 not simply an indication of the impression the course of events 
 was making on the directors of the bank, but upon British 
 opinion generally. The bank was obliged to maintain a high 
 rate of discount, although money was so plenty that it could 
 be borrowed on good securities in the market as low as -J per
 
 EFFECT OF EUROPE'S LOSS OF GOLD 281 
 
 cent, per annum. 1 The Reichsbank raised its rate to 4 per 
 cent, early in October, on account of the withdrawals for the 
 United States. Pixley & Abell estimated that the total 
 amount of gold sent from England, France, and Germany 
 from July 1 to October 1 was 10,500,000, and while the stock 
 of gold was diminishing in the banks of the two latter countries 
 the stock of silver was increasing. Alfred E. Lee, consul at 
 Frankfort, in a communication to this government, in Novem- 
 ber, in speaking of the advance of discount rates of the 
 Bank of France to 3, and the bank of Germany to 4 per cent., 
 said : " Yet the purchases of grain are still far from being 
 ended, and those of cotton are just beginning. What the re- 
 sult of all this will be can only be guessed, but intelligent men 
 are not wanting who believe that the banks of France, Eng- 
 land, and Germany may be obliged to advance their rate to 
 6 per cent., or even higher, and that a financial crisis may be 
 impending that will convulse all Europe." 
 
 In the Saxon Landtag an effort was being made to pass a 
 resolution asking the federal council to reintroduce the double 
 standard. One of the arguments for it was the depreciation 
 in the value of the product of the silver mines of the empire, 
 that of the Freiberg mine having fallen off 1,000,000 marks 
 ($238,000). Among the other early indications of the bime- 
 tallic campaign in Germany was a petition of the Chamber of 
 Commerce of Schweinitz and Waldenburg to the Landtag, 
 in favor of silver restoration because of the injustice of paying 
 debts in depreciated coinage. Obligations were being dis- 
 charged daily in legal-tender silver, of which $120,000,000 
 was still in circulation. Thus, German security holders, as 
 well as mine owners, had reasons for desiring the restoration 
 of silver in the currency system. When the sales of silver 
 were discontinued the government ceased to acquire gold, and 
 
 1 Conant to Secretary Sherman, Sept. 20, 1879.
 
 262 THE CONFERENCE OF 1881 
 
 its accumulated stock began to decline, fully 500,000 being 
 withdrawn for America by December 1. The stock of 
 the Bank of England had been depleted of about 4,000,- 
 000, and that of the Bank of France of about 6,000,000, 
 though every possible step was taken, especially by the latter 
 bank, to prevent it. The tide did not turn in favor of Europe, 
 as was usual at this season of the year, for, while the imports 
 of gold into this country fell off for a time, the rate of ex- 
 change prevented exports, and early in 1880 the imports began 
 again. 
 
 Scientific opinion turned somewhat tardily to the careful 
 consideration of the appreciation of gold, as resulting from 
 its scarcity, and the consequent effect on the price of those 
 commodities measured by it. But in 1879 distinguished au- 
 thorities in England and on the Continent examined the sub- 
 ject fully, and intensified the bimetallic sentiment by at- 
 tributing to the appreciation of gold a large share of the in- 
 dustrial woes of the times. Prof. J. Thorold Rogers, of the 
 University of Oxford, in an article in the Princeton Rcviciv 
 upon the " Causes of Commercial Depression," held that 
 there could no longer be a doubt that prices, wages, and profits 
 were falling in very many industries before prosperous, and 
 he considered " the first cause in importance, the most general 
 and in all probability the most enduring," the rapid rise in the 
 economical value of gold. 1 The matter was more elaborately 
 treated by Robert Giffen and others, the conclusion in each 
 case being that the fall in prices was mainly, if not wholly, due 
 
 1 " The writer has been informed by those who are best competent 
 to Rive an opinion that no traceable rise in prices has occurred in 
 those countries which use a silver standard only, and that this is 
 particularly the case in India, where the loss which the government 
 incurs arises from the necessity of meeting liabilities due to Eng- 
 land in a currency which has increased in costliness by all the 
 difference between the old and the present value of silver as meas- 
 ured by gold." Prof. J. Thorold Rogers, in the Princeton Rcricw, 
 January, 1879.
 
 PROSPERITY IN THE UNITED STATES 263 
 
 to the appreciation in the value of the yellow metal, and that 
 the effects on trade both at home and abroad had been disas- 
 trous. 1 But the contrary opinion was stubbornly maintained 
 by the advocates of the gold standard, both in England and on 
 the Continent. There was no more conspicuous supporter of 
 gold in France than Parieu, who had taken so prominent a 
 part in the conference of 18G7, and who, as a member of the 
 Senate was opposing the steps of the government, which by this 
 time was thoroughly enlisted in behalf of international bi- 
 metallism, being convinced that it might be disastrous to delay 
 longer in the expectation that the United States might fool- 
 ishly adopt the free coinage of silver on their own account. 
 
 The Forty-Sixth Congress reassembled on December 1, 
 with the financial affairs of the United States in a highly 
 gratifying state. " The resumption of specie payments," said 
 President Hayes in his message, " has been followed by a very 
 great revival of business. With a currency equivalent in value 
 to the money of the commercial w T orld, we are enabled to enter 
 upon an equal competition with other nations in trade and 
 production. The increasing foreign demand for our manu- 
 factures and agricultural products has caused a large balance 
 of trade in our favor, which has been paid in gold from the 
 1st of July last to November 15, to the amount of about $59,- 
 000,000. Since the resumption of specie payments there has 
 also been a marked and gratifying improvement of the public 
 credit." In speaking of the plan for another conference which 
 
 1 " The ' moral ' of much that has been said is clearly this, that, 
 if possible, the scarcity of gold which has contributed to the present 
 fall of prices, and have further serious effects in future, should 
 be mitigated, and should. at any rate not be aggravated by legisla- 
 tive action Still more we ought to deprecate any change 
 
 in silver-using countries in the direction of substituting gold for any 
 part of the silver in use. It would be nothing short of calamitous to 
 business if another demand for gold like the recent demands for 
 Germany and the United States were now to spring up. Even a 
 much less demand would prove rather a serious affair before a very 
 long time elapsed." Robert Giffen, in Journal of the London Statis- 
 tical Society for March, 1879.
 
 264 THE CONFERENCE OF 1881 
 
 had been the subject of some diplomatic correspondence be- 
 tween France and the United States, he said : 
 
 " The pendency of the proposition for unity of action between 
 the United States and the principal commercial nations of Europe 
 to effect a permanent system for the equality of gold and silver in 
 the recognized money of the world, leads me to recommend that 
 Congress refrain from new legislation on the general subject. The 
 great revival of trade, internal and foreign, will supply during the 
 coming year its own instructions, which may well be awaited be- 
 fore attempting further experimental measures with the coinage. 
 I would, however, strongly urge upon Congress the importance of 
 authorizing the Secretary of the Treasury to suspend the coinage 
 of silver dollars upon the present legal ratio. The market value of 
 the silver dollar being uniformly and largely less than the market 
 value of the gold dollar, it is obviously impracticable to maintain 
 them at par with each other, if both are coined without limit. If 
 the cheaper coin is forced into circulation it will, if coined without 
 limit, soon become the sole standard of value, and thus defeat the 
 desired object, Avhich is a currency of both gold and silver, which 
 shall be of equivalent value, dollar for dollar, with the universally 
 recognized money of the world." 
 
 Secretary Sherman said in his report: 
 
 " The total amount of silver dollars coined to Nov. 1, 1879, under 
 the act of Feb. 28, 1878, was $45,206,200, of which $13,002,842 was in 
 circulation, and the remainder, $32,203,358, in the Treasury at that 
 time. No effort has been spared to put this coin in circulation. 
 Owing to its limited coinage, it has been kept at par; but its free 
 coinage would soon reduce its current value to its bullion value, and 
 thus establish a single silver standard. The inevitable result would 
 be to exclude gold coin from circulation. It is impossible to ascer- 
 tain what amount of silver coin, based upon the ratio of 16 of 
 silver to 1 of gold, can be maintained at par with gold, but it is mani- 
 fest that this can only be done by the government holding in its 
 vaults the great body of the silver coined. It would seem that noth- 
 ing would be, gained by an unlimited coinage unless it is desirable 
 to measure all values by the silver standard. The Secretary cannot 
 too strongly urge the importance of adjusting the coinage ratio of the 
 two metals by treaties with commercial nations, and, until this can 
 be done, of limiting the coinage of the silver dollar to such a sum 
 as, in the opinion of Congress, would enable the department to 
 readily maintain the standard dollars of gold and silver at par with 
 each other." 
 
 Congress wisely refrained from seriously exploiting its 
 silver sentiment at that session, and the Senate declined to 
 take np the "Warner Bill upon an adverse report, in view of the 
 probability of another conference in the near future. The ad- 
 ministration kept a close watch upon the course of events in 
 other countries. The bimetallic agitation in Germany grew,
 
 GERMANY HALTS IN ITS REFORM 265 
 
 and the government, abandoning hope of immediate relief by 
 the free coinage of silver in this country, set to work upon 
 measures of its own. It was currently reported that Germany 
 would remonetize silver, and that Bismarck had become a bi- 
 metallist. There is little doubt that the question of abandon- 
 ing the policy of its monetary reform and of proceeding on the 
 double standard was seriously considered in the Berlin cabinet, 
 but the difficulties led only to temporary measures. The 
 resumption of the sales of silver was considered impracticable, 
 involving as it did a heavy increase in the deficit of the imperial 
 treasury at a time when taxes were high, and the imposition of 
 new taxes was dangerous in the face of that growth of socialism 
 which in itself was becoming a serious problem for the Iron 
 Chancellor. In April, 1880, he laid before the Federal Coun- 
 cil a bill to increase the coinage of imperial silver from 10 
 marks per capita, which was the amount provided by the law 
 of 1873, to 12 marks. In his report upon the bill he gave 
 statistics to show that the silver in circulation was inadequate 
 to the needs of the people. He did not fear that this would 
 make the supply too large, and called attention to the safe- 
 guards against an oversupply. The increase, he said, would 
 furnish the wished-for opportunity for recoining the silver 
 which had accumulated in the hands of the government, and 
 which he valued at 31,000,000 marks. The report also 
 stated that the 5-inark notes did not seem to be appreciated 
 by the public, and it proposed that their circulation be re- 
 duced from 46,122,210 marks to 40,000,000. " It appears," 
 said Andrew D. White, Minister to Germany, writing to Sec- 
 retary Evarts at the time, " that the German government is 
 gradually reverting to an extensive use of silver, which, in 
 1873, it was supposed to have permanently discarded." 
 
 It is extremely doubtful if this increase per capita in the 
 silver coinage would have suggested itself to the government 
 but for the opportunity it afforded for using the silver on
 
 266 THE CONFERENCE OF 1881 
 
 hand without incurring the loss of putting it on the market. 
 An increase of two marks per capita would call for a further 
 coinage of about 115,000,000 marks on the basis of the popu- 
 lation of the empire at that time, and this would not only have 
 absorbed the bar silver still in the hands of the government, 
 but some 70,000,000 marks besides, on which the loss might 
 have been saved had the step suggested itself before it was sold. 
 The increase of the circulation was apparently only an excuse, 
 for it could not be increased that amount except by coining 
 bars. Calling in old thalers and recoining them into im- 
 perial marks would be changing only the denomination of the 
 coin without affecting the amount in circulation, except to 
 reduce it while the operation was in progress. The intention 
 probably was, to not only consume the unsold bar silver in new 
 coinage, but to relieve the bullion stock of the Reichsbank of 
 its oversupply of silver, at the same time reducing the note cir- 
 culation as proposed. It was currently reported that silver 
 represented about two-thirds of the bullion of the imperial 
 bank at that time. 
 
 The problem was extensively discussed in Germany dur- 
 ing the remainder of 1880. Bimetallism mustered the strong- 
 est economic authorities, such as Wagner, Schaefflc, Lexis, and 
 Arendt. It was defended in the Reichstag by several mem- 
 bers, including one of the leaders, Von Kardorff. The views 
 of Bismarck were supposed to have been reflected by one mem- 
 ber, an interpreter of the Chancellor's policy, when he com- 
 pared the mass of gold in circulation in the world to a too 
 scanty blanket on a bed occupied by more than one person, each 
 trying to pull as much of the blanket as possible over himself. 
 The German agriculturists in their annual congress de- 
 manded bimetallism, and it was endorsed at numerous public 
 meetings. It became very evident that the German govern- 
 ment would not care to decline to participate in another inter- 
 national conference. To add to its difficulties, the gold which
 
 FRANCE SUFFERS SEVERELY 267 
 
 had been accumulated at so great a loss on its silver began to 
 leave it in the fall of that year. 
 
 The English government was met by a rising tide of protest 
 against prevailing conditions. The Chambers of Commerce 
 of Liverpool and Birmingham endorsed the plan of interna- 
 tional bimetallism, bankers and merchants at Manchester and 
 London petitioned for it, and a large portion of the directory 
 of the Bank of England either favored it openly or were half 
 inclined to. Though the bank had been more successful in 
 acquiring gold during 1880 than the Bank of France and the 
 Reichsbank, the withdrawals for America required it to take 
 unusual precautions, none of them profitable to the bank or 
 helpful to general business. 
 
 But no country was being harder hit than France. In 
 1876 she imported 598,000,000 of francs in gold; in 1880, 
 only 194,000,000 of francs. In 1876, she exported only 94,- 
 000,000 of francs; in 1880, she exported 413,000,000. The 
 composition of the stock of the Bank of France altered in the 
 same proportion. It was composed in 1876 of 1,539,000,000 
 francs in gold and 640,000,000 in silver; in 1880 it com- 
 prised 564,000,000 in gold and 1,222,000,000 in silver. It 
 had thus lost in these five years 975,000,000 of gold and un- 
 willingly acquired 582,000,000 of silver. I It is a fact worthy 
 of note in this connection that from 1876 to 1880 the French 
 imports of merchandise exceeded exports by over 4,500,000,- 
 000 francs. 
 
 The imports of gold into the United States during some 
 periods of the year exceeded the capacity of the Philadelphia 
 mint. The Director of the Mint in his annual report (1880) 
 said: 
 
 " The past fiscal year has exhibited monetary phenomena unusual 
 and unexpected. The deficient harvests in Europe and our unusual 
 bounteous supply of exportable food produced an importation of gold 
 
 i De Normandie, Governor of the Bank of France, address, May 
 14, 1881.
 
 268 THE CONFERENCE OF 1881 
 
 unchecked by advancing prices or the amount of existing circula- 
 tion already seemingly abundant. The heavy importation of foreign 
 coin and bullion which commenced in August, 1879, continued until 
 the close of the calendar year, and has been again resumed within 
 the last three months. The remarkable increase of metallic circu- 
 lation has been largely absorbed by the business community." 
 
 Concerning the mintage of this fiscal year, ending June 30, 
 1880, he said: 
 
 " The British mint was occupied with the coinage of gold only 
 during a part of the month of December, and coined but $170,571. 
 Less than $5,000,000 was coined at the French, and about $11,000,000 
 at the German, mints in 1879, which presents a striking contrast to 
 the coinage of $39,080,000 gold at the United States mints, and an 
 accumulation of gold bullion by the 1st of January amounting to 
 $60,734,318 beyond the capacity of the mints for coinage." 
 
 In their reports to Congress both the President and the 
 Secretary of the Treasury dwelt upon the difficulties of mak- 
 ing the silver dollars circulate ; they regularly returned to the 
 Treasury after they had, at some little expense for transporta- 
 tion, been sent out to different points. For these and other 
 reasons they recommended that the further compulsory coin- 
 age of such dollars be suspended, or that the ratio be changed 
 so that their intrinsic value would be nearer equal to that of 
 gold. The average value of the silver dollar in 1880 was 88 
 cents. The Secretary said : 
 
 " It may be better for Congress at the present time to confine its 
 action to the suspension of the coinage of the silver dollar, and to 
 await negotiations with foreign powers for the adoption of an inter- 
 national ratio ; but compelled by official duty to report upon this 
 subject, the Secretary feels bound to express his conviction that it is 
 for the interest of the United States now, as the chief producer of 
 silver, to recognize the great change that has occurred in the relative 
 market value of silver and gold in the chief marts of the world, to 
 adopt a ratio for coinage based upon market value, and to conform 
 all existing coinage to that ratio, while maintaining the gold eagle 
 of our coinage at its present weight and fineness. He confidently 
 believes that the effect of this measure will be to make our gold and 
 silver coins the best international standards of value known." 
 
 It is evident that the Secretary was not hopeful of any 
 practicable results of the coming conference, or that he mis- 
 understood the feeling of the Latin Union as to the proper 
 ratio. "While the coinage of silver at the ratio of 18 to 1, the 
 market ratio at that time, would have given us temporarily
 
 JOINT ARRANGEMENTS FOR ANOTHER CONFERENCE 269 
 
 a silver dollar worth as much as gold, it would have placed 
 another obstacle in the path of bimetallism, and we can see, 
 now at least, that such a coin would have speedily depreciated. 
 Such dollars would not have circulated, and had their coinage 
 been authorized at the discretion of the Secretary very few 
 of them probably would have been coined. 
 
 Congress refrained from any action. In view of the pro- 
 posed conference it was better to remain inactive, and so afford 
 the European nations no new reasons for maintaining their at- 
 titude of expectancy. There was only one course that would 
 really have helped the cause of bimetallism under the circum- 
 stances the prompt and unconditional repeal of the Bland- 
 Allison Act. It would have produced more effect upon Eng- 
 land than anything else. Still it was fortunate that Congress 
 did nothing worse than keep quiet upon the subject. Another 
 free silver bill would have made a conference hopeless, serious 
 as was the condition of affairs in Europe. 
 
 Arrangements were completed betw r een our government 
 and that of France for the issue of a joint invitation to the 
 other governments, and it was sent out in February, 1881. By 
 its terms " the conference was to examine and adopt, for the 
 purpose of submitting the same to the governments repre- 
 sented, a plan and a system for the establishment by means of 
 an international agreement of the use of gold and silver as bi- 
 metallic money, according to a settled relative value between 
 these two metals." Germany accepted with alacrity, in strik- 
 ing contrast to its declination of three years before. The Eng- 
 lish government made use of its usual formula in its reply 
 it could not discuss proposals in support of the principle of the 
 double standard, but, upon reflection, it said, and out of cour- 
 tesy it would send delegates with the understanding that they 
 would in no way be bound by the conclusions of the confer- 
 ence. It did not this time ask for a side-door arrangement in 
 the shape of the consideration of plans for unity of coinage;
 
 270 THE CONFERENCE OF 1881 
 
 there was danger, under the changed circumstances, that those 
 seeking the conference would decline to inject that pretence 
 into the invitations again, and it was plain that England was 
 too seriously interested to allow herself to be unrepresented. 
 She was earnestly desirous of having the other states do some- 
 thing for silver, and of maintaining the exclusive gold stand- 
 ard for herself exclusively. 
 
 The delegates accredited to the conference, which by agree- 
 ment was to assemble at Paris April 19, were as follows: 
 
 Aust rla-Hungary : 
 
 Count Von Kuefstein, Councillor of the Embassy at Paris 
 and member of the Chamber of Peers. 
 
 Chevalier Anthony Von Niebauer, Councillor to the Ministry 
 of Finance. 
 
 Alexander Von Hegedus, Deputy in the Hungarian Diet. 
 Belgium : 
 
 Eudore Pirmez, member of the House of Representatives. 
 
 Garnier-Heldewier, Councillor to the Legation at Paris. 
 Denmark: 
 
 Moritz Levy, Councillor of State. 
 Germany: 
 
 Baron Von Thielmann, Councillor to the Embassy at Paris. 
 
 Schraut, Government Privy-Councillor. 
 Greece: 
 
 Brailas-Armeni, Minister to France. 
 The Netherlands: 
 
 A. Vrolik, ex-Minister of Finance. 
 
 Pierson, Professor of Political Economy at the University of 
 
 Amsterdam, Director of the Bank of the Netherlands. 
 Portugal: 
 
 Count Do San-Miguel, Secretary of the Legation at Paris. 
 Sweden: 
 
 Dr. Hans Forssell, President of the Chamber of Finance. 
 Norway: 
 
 Dr. Broch, Professor at the University of Christiania. 
 Spain: 
 
 Moret y Prendergast, Deputy in the Cortes. 
 Switzerland: 
 
 Dr. Kern, Minister to France. 
 
 Charles E. Lardy, Councillor to the Legation at Paris. 
 
 Burckhardt-Bischoff, banker. 
 Italy: 
 
 Seismit-Doda, ex-Minister of Finance, member of the Italian 
 Parliament. 
 
 Luzzatti. member of the Italian Parliament. 
 
 Simonelli. member of the Italian Parliament. 
 
 Count Rusconi, Secretary-General of the Council of State. 
 Russia: 
 
 T. de Thoener, Privy-Councillor and Director of the Treasury 
 Department.
 
 PERSONNEL OP TUB CONFERENCE 271 
 
 \ 
 
 England: 
 
 Sir Charles Freinantle, Deputy Master of the Mint at London. 
 British India: 
 
 Sir Louis Mallet, Under-Secretary of State. 
 
 Lord Reay. 
 Canada: 
 
 Sir Alexander Gait, High Commissioner of Canada at London. 
 France: 
 
 Barth61emy Saiut-Hilaire, Minister for Foreign Affairs. 
 
 J. Magnin, Minister of Finance. 
 
 J. B. Dumas, President of the Board of Control of Monetary 
 Circulation. 
 
 De Normandle, Governor of the Bank of France. 
 
 Enrico Cernuschi. 
 United States: 
 
 William M. Evarts, ex-Secretary of State. 
 
 Allen G. Thurmau, ex-Senator from Ohio. 
 
 Timothy O. Howe, ex-Senator from Wisconsin. 
 
 S. Daua Horton. 
 
 The personnel of the conference, it will be seen, was 
 largely new. France appeared with a delegation of pro- 
 nounced bimetallists, including Cernuschi, whose polemics had 
 greatly influenced French opinion. England allowed herself 
 to be represented mainly through the governments of her col- 
 onies, the government of India appearing for the first time in 
 an international conference. The only delegate who had rep- 
 resented his government in both the conferences of 1867 and 
 1878 was Broch, of Norway; Vrolik, of the Netherlands, had 
 been appointed a delegate to both, but was unable to attend in 
 1878. The only other member of the conference of 1867 was 
 Dr. Kern, of Switzerland. Feer-llerzog, the eminent advocate 
 of the gold standard, who had represented his government in 
 every conference up to this time, was dead. Baron Von Kuef- 
 stein of Austria, Pirinez of Belgium, Lardy of Switzerland, 
 Count Rusconi of Italy, Thoerner of Russia, and Dana Hor- 
 ton of the United States had been members of the conference 
 of three years before. 
 
 The conference was called to order on the afternoon of 
 April 21, 1881, at the Ministry of Foreign Affairs by Minis- 
 ter Hildaire, who welcomed the delegates cordially, and said 
 that, while the conference of 1878 had seemed premature, and
 
 272 THE CONFERENCE OF 1881 
 
 so had accomplished nothing, the " significant and even alarm- 
 ing symptoms " that had manifested themselves in the three 
 years that had elapsed indicated that the time was ripe for 
 action. Magnin, the French Minister of Finance, was chosen 
 president, and Vrolik, of the Netherlands, vice-president. The 
 former, in taking the chair, reviewed the history of preceding 
 conferences and expressed the hope that it could at last be 
 proved, by the data of theory as well as by those of experience, 
 that international bimetallism was the only system capable of 
 restoring monetary regularity throughout the world. In con- 
 sidering the advisability of the preparation of a questionnaire, 
 it appeared that some of the delegates, especially those of 
 Germany, were anxious to first submit to the conference cer- 
 tain declarations as to the position of their governments, but 
 the majority favored the preparation of a questionnaire first, 
 and the selection of a committee for the purpose was left to 
 the delegations of France and the United States. They de- 
 cided that the committee should be composed of one delegate 
 from each country represented, and should be chosen by the 
 delegations themselves. The suggestion was adopted, and the 
 conference adjourned to await the action of the committee so 
 chosen. 
 
 The committee met two days later and was composed of 
 Baron von Thielmann for Germany, Niebauer for Austria, 
 Hegedus for Hungary, Pirmez for Belgium^ Prendergast for 
 Spain, Horton for the United States, Cernuschi for France, 
 Brailas for Greece, Vrolik for the Netherlands, Count Do San- 
 Miguel for Portugal, Dr. Forssell for Sweden, Dr. Broch for 
 Norway, Luzzatti for Italy, Thoerner for Russia, and Dr. 
 Kern for Switzerland. England and her colonies were not 
 represented, their delegations not having arrived. The diffi- 
 culty of securing a definite decision in so large a committee in 
 a short space of time was soon manifest, and it was determined 
 to delegate to Cernuschi and Horton, as the representatives of
 
 THE DUTCH PROPOSITIONS ADOPTED 273 
 
 the states from which the invitations had emanated, the work 
 of preparing a draft of questions for submission at a later meet- 
 ing. The Dutch delegates had prepared a plan of discussion 
 which was placed at the disposal of Cernuschi and Horton, who 
 went to work earnestly, but as theorists. They each prepared 
 an elaborate questionnaire, dealing extensively with the the- 
 ory and history of money. A discussion of them would have 
 consumed many days in such a conference. It was not till the 
 third of May that they were ready for presentation to the com- 
 mittee. At the meeting that day, England was represented by 
 Sir Charles Fremantle. Neither of the proposals submitted 
 by Cernuschi and Horton were acceptable, except to those 
 who desired to give great prominence to the scientific side of 
 the discussion, and they were very few. Practicable and diplo- 
 matic questions were preferred, and the result was that the 
 plans, on which Cernuschi and Horton had worked nine days, 
 were thrown aside by the committee, and the plan originally 
 submitted by the Dutch delegates was adopted, with abundant 
 assurances to Cernuschi and Horton that the scientific value of 
 the questions they proposed was fully appreciated. The de- 
 sire of the German delegates and of others to submit declara- 
 tions before debate was begun manifested itself again, and, 
 it being generally understood that Baron von Thielmann had 
 important considerations to offer, the committee decided to 
 report in favor of hearing the declarations immediately after 
 the reading of the questionnaire, which was as follows: 
 
 " I. Have the diminution and the great oscillations which have 
 taken place in the value of silver, chiefly within the last few years, 
 been hurtful or not to commerce, and, consequently, to general 
 prosperity ? 
 
 " Is it desirable that the relation of value between the two metals 
 should possess a high degree of stability? 
 
 " II. Should the phenomena referred to in the first part of the 
 preceding question be attributed to increase in the production of 
 silver or to acts of legislation? 
 
 " III. Is it, or is it not, probable that, if a large group of states 
 should agree to the free and unlimited mintage of lawful coins of 
 the two metals, with full legal tender faculty, at a uniform ratio be- 
 18
 
 274 THE CONFERENCE OF 1881 
 
 tween the gold and silver contained in the monetary unit of each 
 metal, a stability in the relative value of these metals would be ob- 
 tained which, if not absolute, would, at least, be very substantial? 
 
 " IV. If so, what measures should be taken to reduce to a 
 minimum the oscillations in the relative value of the two metals ? 
 
 " For instance: 
 
 " 1. Would it be desirable to impose upon privileged banks of 
 issue the obligation to receive at a fixed price any gold and silver 
 bullion which the public might offer? 
 
 " 2. How could the same advantage be secured to the public in 
 countries where privileged banks of issue do not exist? 
 
 " 3. Should coinage be gratuitous, or, at least, uniform, for the 
 two metals in all countries? 
 
 " 4. Should there be an understanding that international trade 
 in the precious metals should be left free of all restraint? 
 
 " V. In adopting bimetallism, what should be the ratio between 
 the weight of pure gold and of pure silver contained in the monetary 
 units?" 
 
 This was laid before the conference, which reassembled on 
 May 5, with the recommendation that the delegates having 
 declarations to make should have the opportunity to do so 
 before the opening of the debates; that general discussion 
 should precede the deliberations upon the different paragraphs 
 of the questionnaire, and that each delegate should retain the 
 right to propose new questions at any time. These recom- 
 mendations were adopted, and it was fully two months before 
 any attention was paid to the specific features of the ques- 
 tionnaire, except incidentally in a lengthy general discussion. 
 
 The proceedings were begun by Baron von Thielmann, who 
 read the declaration which he was desirous of bringing before 
 the conference. In view of the peculiar position in which 
 Germany had been placed by her monetary reform, and as this 
 declaration was in its nature, if not in its effect, one of the 
 most important features of the conference, it deserves to be 
 given in full. It was as follows: 
 
 " The imperial government of Germany, in taking part in this 
 conference called for the object of establishing an international 
 monetary system based upon bimetallism, does not Intend by so do- 
 ing the prejudice its further determinations in the premises; the dec- 
 larations of its delegates should not, therefore, be regarded as def- 
 initely binding upon the imperial government, but, rather, as a basis 
 for later negotiations. 
 
 " At the time, between 1865 and 1870, when monometallism with
 
 THE GERMAN DECLARATION 275 
 
 the single gold standard gained ground throughout a larger por- 
 tion of the civilized countries, and when, towards the close of that 
 period, a considerable quantity of gold found Its way into the treas- 
 ury of the German Empire, the government took advantage of the 
 occasion to firmly establish Its monetary system, and to regulate in 
 a uniform manner, upon the basis of the gold standard, the systems 
 which, up to that time, had prevailed in the different states of the 
 empire. If, at that period, Germany had retained the single stand- 
 ard of silver, or if she had adopted bimetallism, other countries 
 could the more easily have passed to the single gold standard, for 
 the reason that the establishment of bimetallism in Germany would 
 have facilitated the sale of their silver. 
 
 " The monetary reform in Germany, determined upon and de- 
 creed after mature consideration, is at this moment in a very ad- 
 vanced state; 1747 millions of marks have been struck in gold coins, 
 while 1080 millions of marks in silver coins, of earlier mintage, 
 have been demonetized; the cost of these operations amounting to 
 44 millions of marks. 
 
 " According to the highest estimate, there still remain in Germany 
 about 500 millions of marks in old thalers, including Austrian 
 thalers. This monetary reform has sensibly bettered the condi- 
 tion of monetary circulation in Germany; not only has the general 
 circulation augmented, as calculated per capita of the inhabitants, 
 but it has also gained in this respect, that the circulation of gold 
 has increased, while that of silver money and of subsidiary coins, 
 as well as of notes not covered by a metallic reserve, has diminished. 
 While, therefore, considering the monetary system of Germany, as 
 established upon solid foundations, we in no wise fail to recognize 
 the import of the fall in the metal silver, which has since occurred. 
 
 " It is generally agreed to attribute this fall less to the sales of 
 silver made by Germany than to the measure adopted by our 
 government of taking from silver its quality of legal tender, an 
 action which led the states of the Latin Union to put a stop to their 
 coinage of silver. 
 
 " It cannot be denied that this latter measure, by doing away with 
 the compensating effect which, until then, had maintained within 
 narrow limits the oscillations in the price of silver, removed all 
 obstacles to a progressive and limitless fall; it is, on the other hand, 
 but just to admit that the fear of finding themselves compelled to 
 receive a half-milliard of marks of German silver, which could not 
 fail to depreciate in a very considerable degree their own circulation, 
 had no Uttle influence in the decision taken by the Latin Union. 
 
 " The fall of silver would, nevertheless, not have reached the 
 point it did if at the same time the production of that metal had not 
 considerably augmented in America while the demand in Asia was 
 diminishing. In view of these combined circumstances, the im- 
 perial government, in the month of May, 1879, resolved to suspend its 
 sales of silver, and they have not since been resumed. This action, 
 by giving firmness to the metal market, tended to facilitate the 
 initiative of those powers which were interested in the rehabilita- 
 tion of silver. It also had the effect of diminishing the demand for 
 gold, a fact the more important in that the decreasing production 
 of the latter metal, in the face of a constantly growing demand, hnd 
 within the last few years caused a certain degree of tension in the 
 market.
 
 276 THE CONFERENCE OF 1881 
 
 " We recognize without reserve that a rehabilitation of silver is 
 to be desired, and that it might be attained by the re-establishineut 
 of the free coinage of silver in a certain number of the most popu- 
 lous states represented at this conference, if these states, to this 
 end, should adopt as a basis a fixed relation between the value of 
 gold and that of silver. Nevertheless, Germany, whose monetary 
 reform is already so far advanced and whose general monetary 
 situation does not seem to call for a change ot system so vast in 
 scope, does not find herself in a position, so far as she is concerned, 
 to concede the free coinage of silver. Her delegates are, therefore, 
 not able to subscribe to a proposition looking to such action. 
 
 " The imperial government is, on the other hand, entirely dis- 
 posed to do its best to second the efforts of other powers which 
 might wish to unite with a view to the rehabilitation of silver by 
 means of the free coinage of this metal. In order to reach this end, 
 and to guarantee these powers against the afflux of the German 
 silver, which they seem to fear, the imperial government would 
 voluntarily impose upon itself the following restrictions: 
 
 " During a period of some years it would abstain from all sales 
 of silver, and, during another period of a certain duration, it would 
 pledge itself to sell annually only a limited quantity, so small in 
 amount that the general market would not be glutted thereby. The 
 duration of these periods, and the quantity of silver to be sold yearly 
 during the second period, would form the subject of ulterior nego- 
 tiations. Such an arrangement would efficiently protect the mints 
 of the bimetallic states against the unlimited outflow of German 
 thalers drawn from the national funds. Private individuals, or the 
 imperial bank (which is a private bank under special control of the 
 government), would not be able, on the other hand, to cause thalers 
 to flow to the mints of the bimetallic union, except in the case of 
 the balance of trade being against Germany, or unless the relation of 
 1 to 15.50, established by the bimetallic union, should undergo a con- 
 siderable modification in favor of silver. This last contingency ap- 
 pears, however, but slightly probable. In all other cases the ex- 
 portation of thalers would of necessity entail a loss to those who 
 might undertake it; and hence the countries of the bimetallic union 
 have no occasion to apprehend that the silver of Germany will inun- 
 date their mints. Furthermore, these operations could be rendered 
 still more difficult by excluding specie in thalers from the coinage 
 in the bimetallic union; a measure of this kind would add to the 
 other expenses to be borne by the exporters of silver, that of the 
 cost of melting down and refining the thalers. 
 
 " If an international arrangement based upon these indications 
 could be arrived at, Germany would still remain free to sell silver 
 within these self-imposed limits, or to sell none at all. But Ger- 
 many, in order still further to contract even these limits, might make 
 other concessions. 
 
 "She could provide in her own circulation a wider area for the 
 metal silver, thus enlarging the use of it. To attain this end the 
 imperial government would engage, eventually, to retire the gold 
 pieces of 5 marks (27,750.000 marks), as well as the imperial treas- 
 ury notes of the same value (40.000,000 marks). 
 
 " It might further melt down and recoin the silver pieces of 5 
 and 2 marks (71 and 101 millions of marks), taking as a basis a re- 
 lation between the two metals approaching that of 1 to 15.50, whereas,
 
 GERMANY'S SO-CALLED CONCESSIONS 277 
 
 under existing legislation 100 marks are made from the pound of 
 flue silver, which is equivalent nearly to the ratio of 1 to 14. 
 
 " You have here, gentlemen, the concessions which the imperial 
 government would offer, and of which its delegates are now ready 
 to discuss the scope and the details of execution." 
 
 The three so-called concessions that Germany was ready 
 to make, therefore, were, first, the suspension of the sales of 
 silver, something which had already occurred; second, the sub- 
 stitution of silver money for small gold coins and notes, which 
 Bismarck had already recommended to the Federal Council 
 as a way to dispose of the bar silver in the hands of the 
 government and to avoid the losses by sales; and, third, to 
 replace the larger silver pieces, coined at 14 to 1, by silver 
 coins minted at 15.50 to 1, the significance of which will ap- 
 pear later. In other words, Germany offered as concessions 
 either what she had been compelled by the force of circum- 
 stances and in her own defence to adopt as a policy, or what 
 appeared to the government as possible aids in ultimately car- 
 rying out the programme of the gold standard. 
 
 This declaration was followed by others from several 
 states. Sir Charles Fremantle, of England, restated the 
 familiar position of his government, which did not permit 
 him to vote for the propositions that might be submitted, but 
 did not prevent him from following the discussions with the 
 liveliest interest. Lord Reay said that the presence of Indian 
 delegates must not be regarded as an admission that bimetal- 
 lism could be adopted in India, but the government was 
 greatly interested in the restoration of the value of silver. The 
 Canadian delegate said he could vote upon any propositions 
 submitted, but his government reserved full liberty of action. 
 The Danish delegate had instructions to abstain from all dis- 
 cussions of the manner by which the bimetallic system could 
 be regulated, as his government had no intention of abandon- 
 ing the gold standard so recently introduced. The Portuguese 
 government, announcing that it could not enter into a bimetal-
 
 278 THE CONFERENCE OF 1881 
 
 lie union while its existing system prevailed, would, never- 
 theless, consider the results of the conference and take what 
 action it saw fit. The delegates of Russia, Greece, Sweden, 
 and Norway made similar reservations. Count von Kuef stien 
 said that his government would follow the labors of the con- 
 ference with the same sympathy as in 1878, and make the 
 same reservations. His attitude would be one of friendly 
 reserve, cherishing the hope that the conference would not 
 finally separate before adopting some remedy for the evils of 
 the monetary situation, which Austria considered serious from 
 more than one point of view. So long as its currency was es- 
 sentially one of paper, the government was not in a position 
 to enter into any definite agreement regarding bimetallism. 
 The Swiss delegates announced that by their instructions they 
 were to listen to the reasons for the proposed action and report 
 to their government for subsequent instructions before taking 
 their ground. 
 
 Following these formal declarations the general discussion 
 upon the questionnaire as a whole was begun. As it was 
 very extended, the minutes of the proceedings making a vol- 
 ume in themselves, an effort will be made to outline as con- 
 cisely as possible, without the loss of any essential points, its 
 general character, special attention being given to the more 
 practical features which prevailed to a greater extent than 
 in preceding conferences, doubtless because of the German 
 declaration and other considerations developed from time to 
 time. The theoretical arguments for and against the double 
 standard were mainly of the familiar character. It will be 
 better, also, as the nature of the debate was to a considerable 
 extent shaped by points developed in its course, to follow it in 
 regular order, rather than, by departing from it, to indicate the 
 conclusions upon particular phases. 
 
 It was opened by Cernuschi, who called attention to the 
 importance of the German declaration and made some rather
 
 CERNUSCHI OPENS THE DEBATE 279 
 
 sharp remarks about the persistent obstinacy of England. The 
 success of the conference, he said, depended upon the concord 
 of the four great metallic powers of the world, France, the 
 United States, Germany, and Great Britain. The understand- 
 ing between the two former was an accomplished fact, so that 
 the fate of bimetallism depended upon the two latter. Their 
 refusal to co-operate would condemn it to remain impractica- 
 ble. The conversion of Germany to the principle of bimetal- 
 lism he regarded as an accomplished fact. Its delegate had ad- 
 mitted the desirability of the rehabilitation of silver, and an- 
 nounced its disposition to aid in the undertaking. But the con- 
 currence of Great Britain was for the time being refused. He 
 added: 
 
 " We cannot be astonished at this. In acting thus the British 
 government is in a certain sense only carrying out its time-honored 
 methods. England never abandons her traditions except with ex- 
 treme circumspection; she needs ten years to accomplish an eco- 
 nomic revolution. It took ten years for Sir Robert Peel to pass 
 from the camp of protection to that of free trade; ten years to cease 
 from being a partisan of paper and an adversary of coin. The 
 cabinet of London may still require some time before it adheres to 
 the principle of bimetallism; but its conversion may almost be re- 
 garded as certain." 
 
 While he was not disposed to find fault with the attitude of 
 Germany, her propositions seemed to him insufficient, for 
 under them German bankers could still send silver abroad in 
 payment but decline to receive it. He recalled the fact that 
 ten years before nearly all the nations, including France, \vere 
 moving towards gold monometallism as a result of the con- 
 clusions of the conference of 1867. It was natural enough, 
 he said, that Germany took the course apparently open to her. 
 She did not wish by becoming a bimetallic power to run the 
 risk of being used as a stepping-stone by the other states; she 
 did not wish to aid her neighbors to adopt gold monometallism 
 so that they might be able to thereafter use it against her- 
 self. Had it not been for this natural fear, Cernuschi believed 
 that she would have preferred and adopted bimetallism and
 
 280 THE CONFERENCE OP 1881 
 
 saved the 96,000,000 marks which her reform had cost her, 
 and which, in his view, the other states had gained at her ex- 
 pense. This led him to make a remarkable proposition, though 
 upon his own personal responsibility. In purchasing from the 
 German treasury, as merchandise, a metal degraded by its de- 
 monetization, and thereafter putting in circulation this same 
 metal transformed into money at the legal ratio, all the states, 
 he maintained, had made a profit at Germany's expense. " Let 
 each one find out the sum of its gain," he said, " and reimburse 
 Germany in the amount, and Germany, thus indemnified, for 
 the 96,000,000 marks she has lost, could return without re- 
 strictions to bimetallism." lie believed that India could well 
 afford to contribute largely to the amount, for no country 
 would profit so much by such a change; a restoration of bi- 
 metallism would mean for the Indian treasury an annual sav- 
 ing of at least 25 millions of rupees, which it was then losing 
 in the exchange on the 17 millions of pounds sterling paid to 
 England. As, therefore, most of the nations were favorable 
 to the undertaking, much really depended upon Germany, and, 
 an accord having been reached upon the principles, the time 
 seemed to him to have arrived to negotiate with the German 
 government the practical conditions of an understanding. 
 England, he said, might take her usual slow course in economic 
 reform ; the Scandinavian states and Portugal were in a pecul- 
 iar position, but they could retain it without making much 
 difference; a sufficiently strong union could be formed for 
 the time if those states were left to their own policy. 
 
 Dr. Broch, of Norway, followed with a defence of the 
 gold standard, pointing out the growth of gold monometallism 
 since the time, thirty-five years before, when England alone 
 maintained it. The situation had been reversed; in 1881 no 
 mints were open to silver, and he believed that in all the civil- 
 ized countries of the "West the future belonged to gold, and to 
 gold only. The reasons for this great change, he held to be
 
 AN EFFORT TO BRING PRACTICAL QUESTIONS TO THE FRONT 281 
 
 the large increase in the production of gold, beginning in 
 1850, and the simultaneous scientific awakening, when the 
 people began to have a consciousness of their solidarity, com- 
 merce to attain a wider scope, and international investments 
 and securities to become an element of constantly growing 
 importance, entering more and more largely into transactions 
 and the settlement of international accounts. By this means, 
 he said, Europe had just been able to pay in American securi- 
 ties for the enormous supplies of cereals which three successive 
 bad harvests had compelled her to obtain from the United 
 States. He believed that bimetallism, even if it could be 
 brought about, would be injurious, for the dissolution of such 
 a union would require a liquidation which would mean an in- 
 calculable loss, and one which even the great states might not 
 be able to withstand and to which the smaller ones ought not 
 to expose themselves. He considered it of great importance 
 not to rehabilitate silver, which seemed impossible, but to put 
 a stop to its fall. The true way to do this, in his opinion, was 
 not by arbitrarily raising its value in Europe and America, 
 but by encouraging its use in the countries of the Orient which 
 still had a preference for it. 
 
 Meanwhile some of the delegates had been privately con- 
 sulting concerning the proposals of Germany and of Cer- 
 nuschi, and at the conclusion of Dr. Broch's address Baron 
 von Thielmann moved that the session be suspended for a half- 
 hour. It was agreed to, and at the expiration of the recess 
 Moret y Prendergast, of Spain, proposed that the conference 
 should make an alteration in the order of its labors on ac- 
 count of the great importance of the propositions that had 
 been made. The communication of the German delegate, he 
 said, seemed to raise questions of exceptional gravity from a 
 practical point of view, which most of the governments repre- 
 sented at the conference were probably unprepared to answer, 
 and the declarations of the governments of Great Britain,
 
 282 THE CONFERENCE OF 1881 
 
 India, and Canada appeared to indicate a disposition to lend 
 aid under conditions, and to an extent which had not been 
 definitely determined. He therefore proposed : 
 
 1. To devote one session, which might be at an early date, 
 to a general discussion of the German, English, Indian, and 
 Canadian declarations, for the purpose of discovering their 
 scope and value. 
 
 2. To adjourn, thereupon, to a date which might be fixed 
 by the conference, or which the president of the assembly 
 might be left to determine, but which should in any case be 
 sufficiently distant to permit of the opening and carrying on of 
 negotiations. 
 
 The truth of the matter was that the governments of 
 Great Britain and Germany were extremely anxious to bring 
 about an agreement which would open the mints of the Latin 
 Union and of the United States to the free coinage of silver. 
 England intimated that she might be able to offer something in 
 the way of concessions in addition to those offered by Ger- 
 many, and it seemed to some of the bimetallists that the matter 
 was too important to admit of delay. Cernuschi clung to the 
 idea that by his plan for reimbursing Germany she could be 
 brought into a bimetallic union. But upon consideration it 
 was thought that the adjournment of the conference to an un- 
 certain and distant date might be interpreted in an unfavora- 
 ble sense, if taking place almost at the beginning of the labors 
 and just after it had adopted a programme for the delibera- 
 tions. This was especially urged by the Dutch delegates. It 
 was finally decided to continue the general discussion, but to 
 take no action, and a little later the motion for an adjournment 
 admitting of negotiations might be made if deemed advisable. 
 So the lengthy addresses in which the English and German 
 delegates took but little interest were continued. 
 
 Cernuschi devoted himself to arranging the details of his 
 plan, and with that end in view proposed at the next session, on
 
 THE NETHERLANDS FOB BIMETALLISM 283 
 
 May 7, that the different governments be requested to furnish 
 the conference with detailed information as to their silver 
 coinage since January 1, 1874, the cost to each state of the 
 silver manufactured into coin, the total amount of profit re- 
 alized by buying silver at prices below 60 jf pence, or the 
 price of parity with gold at 15.50 to 1, and to indicate, if possi- 
 ble, the source of the silver ingots. The German government 
 was also requested to furnish a complete statement of its silver 
 coinage. Dana Horton, referring to that statement in the Ger- 
 man declaration which admitted the possibility of the rehabili- 
 tation of silver through the re-establishment of free silver 
 coinage " in a certain number of the most populous states," 
 asked the German delegate in what degree the attitude of 
 England, which, with its Indian possessions, was the most popu- 
 lous, had been the cause of the reserve shown by Germany 
 in her proposals, and whether it might be hoped that, if Eng- 
 land made some concessions, Germany would be disposed to 
 enlarge her own. Baron von Thielmann replied that Eng- 
 land's attitude had certainly been of some importance in de- 
 ciding the plans of his government, for German commerce was 
 largely settled by bills on London, and it was important to 
 have a monetary system similar to that of England. 
 
 The general discussion was then resumed by Pierson, of 
 the Netherlands, in reply to the remarks of Dr. Broch. The 
 bimetallic system might have its inconveniences as claimed by 
 the delegate from Norway, but so, said Pierson, had the gold 
 monometallic system. The question was not which system 
 was perfect, but which offered less inconveniences. He main- 
 tained that the general adoption of the gold standard would 
 be an impossibility, and, further, that it could not have been 
 made to work in England had it not been for the simultaneous 
 existence of bimetallic states. He asked the English delegates 
 what, in their opinion, would have been the influence of the 
 gold discoveries in Australia and America on the value of the
 
 234 THE CONFERENCE OF 1881 
 
 sovereign had not the double standard existed in the Latin 
 Union and in other states, ready to absorb the mass of gold 
 then poured upon the world. After pointing out some of the 
 difficulties which he believed gold monometallic states had re- 
 cently encountered, he expressed the opinion that bimetallism 
 . was the only remedy. Giving that as the conclusion to which 
 his government had arrived, he said : " We are only a small 
 country, and our political influence is assuredly not what it 
 was in the seventeenth century. But one thing, perhaps, has 
 remained to us, namely, the reputation of not judging rashly 
 and of having, moreover, a little experience in commerce. 
 Well, I can assure you that among our leading economists, 
 among our men most conversant with business, there is not one 
 I repeat, not one who does not acknowledge the immense 
 advantages which would accrue from the adoption of the bi- 
 metallic system by all the great states." He maintained by 
 an historical review of monetary conditions that the double 
 standard was possible in practice as well as sound in theory, 
 and called upon those who would not act in concert in the appli- 
 cation of this remedy to tell the conference in what way they 
 expected to remedy the evils from which the world was suffer- 
 ing. "For a remedy there must be," he said; "the present 
 situation is simply unbearable." 
 
 Belgium, which was a strong advocate of the gold standard 
 in the conference of 1878, was even stronger in that of 1881; 
 indeed, Pirmez was the real leader of the gold doctrinaires. 
 He held that the existing situation contained neither the evils 
 nor the dangers which had been portrayed, and that the gold- 
 standard countries were more satisfied with their position than 
 any others. They were resolved not to alter it; not even Ger^ 
 many proposed to do so, and, he said, it was a singular role 
 that bimetallism was playing when it endeavored to persuade 
 those states that they were visited without their knowledge 
 by a serious economic disquietude and monetary disease. On
 
 POSITION OP BELGIUM AND OP ITALY 285 
 
 the other hand, the states that had in their systems a remnant 
 of bimetallism were the disturbed ones. " If," he said, " the 
 Latin Union, in 1865, listening to the counsels of Belgium, 
 had purely and simply adopted the gold standard, as it could 
 then have done, without shock, without difficulty, without 
 loss, it would now be in as good a position as that of the Scan- 
 dinavian states, England, Portugal, and Germany; if it now 
 experiences discomfort, it owes this to bimetallism." But he 
 considered that the states with this legacy of abandoned bi- 
 metallism exaggerated their own difficulties. Their condi- 
 tion, as he saw it, was anything but alarming, and the meas* 
 ures proposed by bimetallists would have the effect, not of 
 mitigating, but of aggravating the vices and dangers they 
 imputed to it. They asked countries embarrassed with an ex- 
 cess of silver to coin still more, to correct an excess by a still 
 greater excess. The result, said Pirrnez, would be disastrous. 
 He did not regard the recent gold famine, so called, as serious, 
 but, if it were, bimetallism would not help it, for he believed 
 that the great states would find their gold being replaced by 
 silver under such a system. In speaking of countries under 
 the paper-money system, he said that it was very natural for 
 such to be supporters of bimetallism, for they could more easily 
 pay off their debts with depreciated silver than with gold. 
 Seismit-Doda, of Italy, thereupon arose and denied emphat- 
 ically that Italy had any such motive in accepting an invitation 
 to the conference. 
 
 His colleague, Luzzatti, continued the debate at the next 
 session, on the 10th, holding that the economic optimism of 
 the Belgian delegate did not rest upon an accurate judgment 
 of the situation. lie called attention to the economic agitation 
 in England, the conversion of practical men like Director 
 Gibbs, of the Bank of England, and the memorials of com- 
 mercial bodies, to show that the conditions under the gold- 
 standard countrv left something to be desired. It was suffi-
 
 286 THE CONFERENCE OP 1881 
 
 ciently evident, lie thought, that the German government had 
 halted in perplexity, Reviewing the situation in other states, 
 the conclusion seemed to him inevitable that Europe required 
 gold, and would require it more and more, and yet the gold 
 it already had was constantly going to America. How, he 
 said, could the Belgian delegate doubt this, when the consign- 
 ments of the metal told the story. While in 1879 and 1880 
 the consignments of coin from Europe to the United States 
 were made only at the end of the year for the settlement of 
 accounts, in 1881, in the first three months alone, 2,500,000 
 of gold were despatched from England to America, while other 
 millions were exported during the same period from France 
 and Germany; and it would be difficult to get it back. It 
 would, he held, be folly for the European nations to continue 
 to debase silver under such circumstances, and wisdom for 
 them to embrace the opportunity to establish bimetallism. 
 
 In reply to what the Italian delegate said concerning senti- 
 ment in England, Sir Charles Fremantle said that Gibbs would 
 be the first to acknowledge that, in his pamphlet advocating bi- 
 metallism, he had not claimed to express the opinion of the 
 Bank of England, still less public opinion in Great Britain. 
 
 The Russian delegate endeavored to bring the conference 
 back to the practical consideration of the German propositions. 
 He thought it was time to quit the purely theoretical ground 
 and seek a practical solution. Setting aside other phases of 
 the question, he conceived it as certain that one measure was 
 better than two, and one standard better than two, and that 
 gold was the best metal for a standard. But money was also a 
 means of exchange, and, as such, it should be sufficient to meet 
 the requirements of trade. It seemed clear to him that there 
 was not enough gold. " To deny the dearth of gold," he said, 
 " is almost denying daylight; and this dearth will probably in- 
 crease, for from the monetary standpoint the resumption of 
 specie payments by Italy, Austria-Hungary, and Russia threat-
 
 SUGGESTIONS BY THE RUSSIAN DELEGATE 287 
 
 ens Europe with a serious danger." It could, in his judgment, 
 be warded off by reverting in a degree to the use of silver; but 
 it was not a question of abandoning the gold standard, or of 
 adopting bimetallism at a fixed ratio. The true practical means 
 of rehabilitating silver seemed to him to lie in the path opened 
 up by the proposals of Germany; the object should be to effect 
 a better distribution of the two metals, and to enable states to 
 dispense with gold where it was not indispensable, and place 
 it where it seemed to be necessary, in the reserves of the banks. 
 He believed that if a majority of the nations would adopt the 
 policy of substituting silver coins for the smaller gold coins, it 
 would neutralize half of the perils with which the dearth of 
 gold was threatening Europe in the future. Half of what 
 Russia, Austria-Hungary, and Italy would require for the re- 
 sumption of specie payments would be found if the gold pieces 
 equivalent to 10 francs and below were transformed into silver 
 pieces. He thought it might be possible to go even further 
 and extend to international exchanges the use of silver with 
 the gold standard. An international piece might be coined, or 
 the metal might be considered from the international stand- 
 point, as a stock exchange security (valeiir de bourse), whose 
 rating in relation to gold would be periodically fixed, either 
 according to the average market rates, or by virtue of an un- 
 derstanding between governments. He called attention to 
 the fact that formerly the gold-monometallist theory rested 
 on two axioms which the German proposals, impelled by the 
 force of events, discarded namely, that gold must be coined 
 in the smallest possible subdivisions, and that silver must be 
 admitted only as subsidiary tokens and he could not see how 
 the conference could do better than to seek a practical applica- 
 tion of the principle that silver had a settled place in the in- 
 ternal circulation by the side of gold. 
 
 Count Rusconi, on the other hand, considered that the 
 conference would find difficulty in agreeing upon anything
 
 288 THE CONFEKENCE OF 1881 
 
 while it could not agree upon a definition of money. "Was it 
 merchandise ? If so, the bimetallists were wrong. If not 
 merchandise, if only a creation of the law which makes and 
 unmakes it at pleasure, the monometallists were wrong, and 
 the law could fix the ratio of value. He took the bimetallic 
 view, and ably supported it, suggesting to the conference in 
 conclusion that it would be more profitable to begin with a 
 theoretical discussion, and to obtain an accurate idea of the 
 true nature of money before undertaking actual programmes. 
 
 Burckhardt-Bischoff, of Switzerland, had for many years 
 been a banker and a believer in the monetary theories of the 
 late Charles Feer-Herzog. He followed Count Rusconi with 
 a strong argument against the allegation that the law made 
 money, and in support of the gold standard. He very ingen- 
 iously combated the theory that the German monetary reform 
 had caused a loss to that state, and that other nations had prof- 
 ited in buying her silver. In the first place, he said, accord- 
 ing to the official documents communicated by the govern- 
 ment of Germany, the difference resulting from the sale of 
 seven millions of pounds of fine silver compared with the pur- 
 chasing price amounted to only 71,000,000 marks instead of 
 96,000,000, as Cernuschi had maintained, the difference aris- 
 ing from the wear of the old coin withdrawn from circulation, 
 a loss inherent in every coin currency, and one for which the 
 introduction of the gold standard could not be held responsible. 
 
 If Germany were to be reimbursed, therefore, according to 
 Cernuschi's plan, it would require only 71,000,000 marks; but, 
 he went further and denied that any loss had resulted to Ger- 
 many from her reform. His reason for this was that the new 
 mark, which constituted the gold unit, had a very different 
 and very superior value to one-third of the old thaler based on 
 silver, the alleged loss resulting from the exchange of the old 
 silver coins for gold on the footing of 15.50 to 1, while the 
 ratio had, in fact, become through silver depreciation 18 to 1.
 
 HORTON DEFENDS BIMETALLISM 289 
 
 He explained it in this way: " To buy 1000 kilogrammes of 
 gold, Germany has paid 15,500 kilogrammes of silver, plus 
 1700 kilogrammes, so-called loss on silver ; total 17,200 kilo- 
 grammes of silver. These 1000 kilogrammes of gold are now 
 worth 18,000 kilogrammes of silver. There is no loss, there- 
 fore, but a profit; and if Germany now wished to repurchase 
 all the silver she has sold for eight years she might do it at a 
 considerable profit." 
 
 He maintained, further, that the gain in value was not con- 
 fined to the silver sold and replaced by gold, but that the whole 
 circulation had gained in value. Germany's exchange at Paris 
 had become 124 francs per 100 marks, but if Germany still 
 had her old silver standard the exchange would be 110 francs 
 per 100 marks. On a monetary stock of 2,500,000,000 this 
 w T ould make a difference of at least 350,000,000 marks. In his 
 opinion, therefore, it was folly to talk about reimbursing Ger- 
 many. The difficulties created for the Latin Union by the 
 stock of 5-franc pieces seemed to him a much more serious mat- 
 ter, and he suggested, as a remedy, that a portion of the silver 
 rejected by circulation should be converted into ingots, of a 
 fixed weight and fineness, to be deposited in the vaults of the 
 great banks of issue, and against which certificates could be 
 issued. They might, he thought, be used as bills of exchange, 
 and commerce could withdraw the silver whenever it was de- 
 manded, either for the arts or to send to the East. 
 
 The American delegates first participated in the debate at 
 the fifth session, on May 12, when Dana Horton read a long ad- 
 dress in defence of bimetallism. He drew a picture of the gold 
 famine before 1850, when the world's stock of gold was but 40 
 per cent, of the whole stock of the precious metals used as 
 money, and, as it was admitted that gold was again becoming 
 scarce and was likely to be more scarce, the situation might be 
 repeated. If gold commanded a premium when silver was in 
 use as money, and helped to augment the stock, a worse calam- 
 19 "
 
 290 THE CONFERENCE OF 1881 
 
 ity would seem to him the logical results of a gold famine when 
 silver was an ostracized metal. Cernuschi followed with an 
 argument to show that bimetallism was not only legitimate 
 and possible, but necessary, because the only system that could 
 protect humanity from the disturbances resulting from the 
 variations in the yield of the mines. Nothing was to be feared, 
 in his opinion, from a liquidation in case of a possible dissolu- 
 tion of bimetallic union, for no state would then have an in- 
 terest in demonetizing a metal. It would be ruinous, as the 
 example of Germany had proved, although during the early 
 years of her sale she had at her side the outlet of the Latin 
 Union, while the United States were substituting silver for 
 small notes ; the operation took place in coincidence with a 
 mintage of 500,000,000 francs of silver in the Latin Union 
 and of $70,000,000 in fractional money in the United States. 
 It would, he said, be ruinous for the Latin Union to undertake 
 to demonetize silver when no outlet existed and monometallism 
 was so conscious of the difficulties in the fall of silver that it 
 had come to confine its pretensions to the maintenance of the 
 statu quo. " It is not entitled to do this," he said; " if its doc- 
 trine is sound, it should persist in furthering the application of 
 that doctrine ; but if it pauses, if it is the first to ask that silver 
 which has already been coined shall continue to be legal cur- 
 rency with full paying power, it is only a disguised and limp- 
 ing bimetallism." 
 
 Baron von Kuefstein, speaking in behalf of the nations on 
 a paper basis, said that they could not be expected to take a 
 metal that the rest of the world rejected, and it would be ex- 
 ceedingly difficult for them to secure gold in the existing situa- 
 tion. He looked with favor upon the suggestion of the delegate 
 of Russia as to the calling in of the 5 and 10 franc gold pieces. 
 
 At this point the Spanish delegate again tried to bring the 
 conference to the speedy consideration of the German and 
 other proposals. He asked it to at once provide for an adjourn-
 
 BIMETALLISM URGED BY THE BANK OF FRANCE 291 
 
 inent, after having heard the speakers whose names were still 
 on the list as desiring to take part in the general discussion. 
 The German delegate supported the motion, but the matter 
 was left still undecided. The general discussion was con- 
 tinued at the sixth session, May 14, by I)e Normandie, Gov- 
 ernor of the Bank of France, who delivered a learned ad- 
 dress on the theoretical and historical side of the question. On 
 the historical side he maintained that institutions of credit 
 had had a much less severe ordeal in bimetallic than in mono- 
 metallic countries. He enumerated the number of times in 
 fifty years that the Bank of England had been compelled to 
 appeal to the Bank of France for help, while the latter had al- 
 ways been able to maintain a steadier and a lower rate of dis- 
 count. In the forty-five years from 1837 to 1881 the Bank of 
 France had altered its discount rate only 100 times, while that 
 of the Bank of England had changed 292 times. He furnished 
 a very clear statement of the changes that had taken place in 
 the reserves of the Bank of France, the loss of gold and the in- 
 crease of silver, and, he said, many were consequently asking in 
 anxiety what might be the result of the conference. " With 
 the development of business, with that feverish movement 
 which, with a full head of steam, carries along the commercial 
 and financial world, who," he asked, " would maintain that a 
 single precious metal is sufficient to meet the ever-increasing 
 requirements of the public ? " "Who could foresee, with a lim- 
 ited metallic circulation, the consequences of a financial catas- 
 trophe, of a dearth, of a deficit in the production of gold ? 
 The banks would be forced to raise their discount to defend 
 their reserves, and that rise in the rate of discount, in the ex- 
 isting state of European markets and with a single metal, 
 might rapidly assume the proportions of a disaster. It was, he 
 urged, good policy not to await that crisis, but to foresee and 
 take action in advance of it. 
 
 Pierson, of the Netherlands, followed with a further ap-
 
 292 THE CONFERENCE OF 1881 
 
 peal for a bimetallic agreement, and Broch, of Norway, again 
 came to the defence of the gold standard. In the latter's 
 opinion, a fall of prices from the exaggerated rise of the seven- 
 ties was salutary, and ought not in the least to be disquieting, 
 but he seemed to admit that a scarcity of gold might occasion 
 difficulties when he said : 
 
 " Hitherto, since Europe formed her existing civilization since 
 the fall of the old world, as it was called it was France who, 
 from the first, from the earliest centuries of the middle ages, always 
 marched at the head of the social movement. This time she has 
 allowed herself to be outstripped by other states. Let her resume 
 her place; let that defective condition called the limping standard 
 cease. I am certain, I repeat, that that is the only definite solution 
 of the problem we are here studying. How fortunate those who, 
 In these great movements, march in the van! theirg are the facili- 
 ties, theirs are the advantages. Woe to the laggards, to the last 
 comers! theirs will be all the accumulated difficulties; theirs will 
 be all the losses." 
 
 The position of the United States from a practical point of 
 view was first given by ex-Senator Howe at the beginning of 
 the seventh session. The opinion still prevailed extensively 
 in Europe that this country urged bimetallism upon other 
 nations in order to provide a market for its silver, and it was 
 to remove this that Howe quite fully explained the nature of 
 the productive wealth of his country. He said that his gov- 
 ernment had no occasion to bull the market for silver nor to be 
 envious of the popularity of gold, for in the same nine years 
 the mines of the United States yielded $55,000,000 more of 
 gold than of silver. Greater interests concerned his govern- 
 ment, whose people were farmers, not miners. In 1879 the 
 value of the cotton crop was more than seven times that of the 
 annual yield of silver; the wheat crop more than twelve times; 
 the maize crop more than eighteen times. Statesmen, he said, 
 should be slow to believe that his government had turned its 
 back upon these enormous interests in order to storm Euro- 
 pean sentiment on behalf of that comparatively petty interest 
 embarked in silver mines. " We do not seek a pinched market 
 pining for our so-called precious metals. "We rather wish to
 
 THE ATTITUDE OF THE UNITED STATES 293 
 
 fiud a busy and lusty world to help consume the really precious 
 fruits of our agriculture. We seek a thrifty world to pay for 
 them." Speaking of the immense increase in commercial fa- 
 cilities within two decades and of the general agreement as to 
 the soundness of the principle laid down by the European dele- 
 gates to the conference of 1878 as to the necessity of employ- 
 ing both metals as money, silver in some and gold in others, he 
 asked the conference how it would proceed in the division. 
 
 "To whom, then, shall we assign silver? To whom gold? The 
 professors of monetary science tell us there is a scientific principle 
 upon which the partition may be made. Unhappily, they do not 
 agree as to that principle. In one school we are taught that gold 
 should be maintained by the rich nations and silver by the poor. In 
 another we are taught that gold should be assigned to the Western 
 nations and silver to the Eastern. Either principle, in application, 
 would lead to awkward results. This conference would probably 
 have too much regard for economic truth to assign Germany, Hol- 
 land, Italy, France, and the United States to the category of poor 
 nations, and surely too much regard to geographical truth to assign 
 either to the category of Eastern nations. Either principle, there- 
 fore, would require those five states to throw down the silver stand- 
 ard and take up the gold standard. Any gentleman can calculate 
 for himself what a supply of silver would thereby be thrown upon 
 the market and what a demand for gold would be made upon it. 
 Under such a movement the question of Mr. Goschen recurs with 
 portentous significance Can the gold be had without a tremendous 
 crisis? The conference of 1878 wisely, as I must think, declined 
 the work of actual partition. It affirmed the necessity for maintain- 
 ing the monetary functions of silver, as well as those of gold, but 
 left the duty of maintaining either to volunteers. Their language 
 was: ' The selection for use of one or the other of these two metals, 
 or of both simultaneously, should be governed by the special situa- 
 tion of each state or group of states.' That system has been tried 
 and has signally failed. The volunteers do use silver, but do not 
 maintain its monetary functions. It is the function of money to 
 measure and to determine values. Silver, as employed by the volun- 
 teers, does not determine values: on the contrary, it confuses values; 
 it confounds them. It is self-contradictory; it reports one thing 
 on one day and another thing on the day following. Such is the 
 situation, as I iinderstand it. with which we are confronted. Silver 
 must be maintained in the standard of values. Left to the volun- 
 tary choice of nations, it is not so maintained. We have no common 
 parliament empowered to say who must and who need not maintain 
 it. What shall be done? 
 
 " The government of the United States steps forward to say 
 frankly and in good faith: We recognize the common necessity 
 affirmed by the conference of 1878; we are ready to do our full share 
 to meet it; we will stand side by side with other states represented 
 here, in maintaining the monetary functions of both metals; we will
 
 294 THE CONFERENCE OF 1831 
 
 concert with you the proper relations between the two; we will open 
 our mints to the coinage of both upon such rates as we shall, to- 
 gether, deem just, and upon that ratio we will hold each to be the. 
 peer of the other in all our trade, domestic and foreign. If any 
 fairer way of meeting this acknowledged necessity exists, I have 
 not heard of it, and I cannot conceive it." 
 
 Howe treated with a pleasantry somewhat tinctured with 
 sarcasm the efforts of the Belgian delegate to show that the 
 alleged monetary malady had been exaggerated and its locality 
 mistaken. In his opinion it was a disease that had fastened 
 itself upon an interest' common to all states and felt chiefly 
 by the most enterprising in commerce. It consisted not so 
 much in the depreciation of silver as in its fluctuations; com- 
 merce could adjust itself to a depreciation, but not to such re- 
 markable variations as had ruled in the silver market. After 
 a reply to the different arguments against the adoption of 
 bimetallism, he said: 
 
 " I venture to predict we shall have that or nothing. I have 
 listened with interest, but wholly without sympathy, to the various 
 suggestions which have been offered for the relief of the silver 
 market. I heard the candid statement made by the honorable dele- 
 gate from Germany in the opening of these deliberations to the 
 effect that the empire will proceed with caution in making future 
 sales of her silver, and may possibly be willing to coin a few more 
 discredited millions. I heard the encouraging suggestion of M. 
 Pirmez that, when Italy shall resume specie payments, we who are 
 limping with an excess of silver may shove some 5-franc pieces on 
 her. I listened to the flattering idea of Dr. Broch, that we may be 
 able to stack up more millions in India and the East. I have even 
 heard it whispered that, rather than see us poor cripples actually 
 sink, some of the gold-standard states might, in some generous, 
 Christian mood, consent to carry a little more of this leprous silver. 
 It is all very kindly meant, but I respectfully submit it is a mis- 
 taken kindness. Let me repeat once more: The United States 
 government does not seek a better market for a depreciated coin. 
 Its purpose is to reform your standard of value by extirpating from 
 it all depreciated coins. We do not wish to load any of our sister 
 states; we wish, rather, to unload them all. We invite you to a 
 union which will eradicate depreciated coin from our monetary sys- 
 tem. If you cannot accept our invitation, do not seduce us into a 
 union to perpetuate the reign of such coin. . . . 
 
 " If, as is so confidently predicted, we are to leave this confer- 
 ence crowned with defeat, it is not for me to say what course our 
 people will take, for I do not know. ... If you persuade them 
 at last that they must surrender one metal, and that the only blanket 
 which can give warmth is the golden one, they may conclude to 
 throw away all bimetallic rags and seek for a part of that blanket.
 
 INDIA'S INTEREST IN SILVER 295 
 
 I know quite well that the only condition upon which we can hope 
 to share that blanket is that we sell to the world more than we buy 
 from it; and I know, as M. Pirmez has reminded us, how delusive 
 these reported balances of trade may be. But our people produce 
 food, and food is a prime necessity to all industry. We shall, there- 
 fore, hope to continue to trade with the world upon some terms; and, 
 besides, when I learn that during the last fiscal year the deposits of 
 gold at the mints and assay offices of the United States included 
 not only $35,000,000 of domestic production, but $62,550,837 of for- 
 eign coin and bullion, I am persuaded that what we call the balance of 
 trade is something better than a delusion." 
 
 The venerable delegate of the Netherlands, who had been 
 a student of monetary problems for more than forty years, and 
 who had been a member of the conference of 1867, reviewed 
 the history of coinage in Europe, and especially in his own 
 country since the beginning of the century, and said that after 
 having been for more than a quarter of a century an avowed 
 partisan of unimetallism he had come, by the force of circum- 
 stances, to declare himself a bimetallist, but on the express 
 condition of this system being adopted and put in operation by 
 a considerable group of states. According to Vrolik's pro- 
 found conviction that was the only remedy. 
 
 One of the most interesting addresses of this session was 
 that of Sir Louis Mallet, the first delegate of British India, 
 because it indicated the character of the preliminary induce- 
 ments that Great Britain was inclined to make to promote a 
 bimetallic arrangement in other states. Though India was 
 not, as ho understood, invited to join a bimetallic union, her 
 delegates were authorized to respond to the desire to sustain 
 the price of silver by engaging to maintain its existing system 
 of the free coinage of silver having full legal-tender quality 
 through British India during a certain definite period to be 
 settled by future negotiation. But his government could only 
 bind itself in so absolute a manner on condition that a certain 
 number of the principal states of the world would engage on 
 their part to maintain within their territories during the same 
 period the free coinage of silver, with full legal-tender quality, 
 in the proportion of 15.50 to 1. His government had done
 
 296 THE CONFERENCE OF 1881 
 
 much to maintain the value of silver, and he denied that it was 
 in any way responsible for its fall. It had been the victim of 
 the policy of others, and he considered that India had a cer- 
 tain right to claim an endeavor on their part to keep up the 
 value of the white metal. His'government believed that a se- 
 rious evil existed, and it was very plain from the Indian point 
 of view. British India not only faced a loss in the remittance 
 of its home charges, but the loss sustained in trade. For each 
 commercial operation two calculations had become necessary. 
 The price of goods must first be calculated in gold, and then 
 the price of gold in silver, and for the latter no exact basis for 
 calculation existed. Pointing out other losses because of the 
 instability in the price of silver, he said that, in his opinion, a 
 bimetallic standard would, under all circumstances, be more 
 stable than a single standard; and he considered a depreciating 
 standard superior to an appreciating one. He believed gold to 
 be insufficient for the needs of the world, even were it not 
 needed by certain states for displacing paper money, and, con- 
 trary to the Belgian delegate, he considered bimetallism as 
 possessing a scientific basis, a theory in entire conformity " with 
 those great economic laws which must always control the acts 
 of the legislator and the fate of nations, and will continue to 
 do so more and more." He concluded by expressing the belief 
 that with persistency and patience the reform could be carried 
 out in spite of the difficulties that seemed to be presented by 
 states announcing their inability to become parties to a 
 bimetallic treaty. 
 
 The Spanish delegate, using the remarks of Sir Louis Mal- 
 let as a pretext, again reminded the conference of the practical 
 problems that were before it. In the Anglo-Indian empire 
 there existed a double monometallism, gold monometallism in 
 Great Britain, silver monometallism in India. The embar- 
 rassments and losses resulting from this system were admitted. 
 It was natural, therefore, said Prendergast, to inquire whether
 
 FORSSELL ARGUES FOR MONOMETALLISM 297 
 
 there might not bo some means fur the welfare of England and 
 India as well as of the whole civilized world, of converting into 
 bimetallism this divergent and injurious double monometal- 
 lism. He thought the solution of the problem might be facili- 
 tated by the discovery of a ratio between the two metals, to 
 act so that, with Indian silver, gold might be procured in 
 England, and with British gold a fixed quantity of Indian 
 silver. The Bank of England under the Peel Act had the 
 power of forming its metallic stock of both metals, admitting 
 silver as one-fourth of the gold. If this action were given an 
 obligatory character, said Prendergast, it would enable any 
 holder of silver to obtain Bank of England notes within the 
 limits of one-fourth of that stock, and this, he considered, 
 might raise the value of silver and suffice to change the mone- 
 tary situation in India. 
 
 The English delegate replied that his government would 
 not fail to take into very serious consideration these observa- 
 tions. He knew it would be glad to be able, without modify- 
 ing the situation in which it was placed, and without re- 
 nouncing the gold-standard system, to find a means of giving 
 its co-operation in the work undertaken by the conference, 
 the restoration of the value of silver. 
 
 Forssell, the Swedish delegate, continued the discussion for 
 the monometallic side, and asked if it were not plain, after 
 making allowances for all the new professions of bimetallism, 
 that that system always lacked the support it needed in order 
 to pass from resolutions into facts. Replying for himself, he 
 said : 
 
 " As sentiment and international courtesy stand for nothing in 
 this matter, it is vain to say and to repeat that the Bank of France 
 has in a few years lost 900,000.000 francs in gold, and increased by 
 700,000,000 francs its stock of silver: that it will lose still more of 
 what it wants to keep and receive still more of what embarrasses it. 
 It is vain to prove that the Bank of Holland is suffering from an un- 
 bearable glut of silver. It is vain to declare that the supreme 
 urgency of an economic and financial reform in Italy will force the 
 whole world to reverse its monetary blunders. Neither one nor the
 
 298 THE CONFERENCE OF 1881 
 
 other will ' convert ' Germany and England to the bimetallic system, 
 unless there is in the economic and monetary situation of those two 
 states themselves a motive power, so to speak, strong enough to 
 triumph over the natural force of their monometallist inertia." 
 
 He then proceeded to argue that bimetallism would be a 
 bad system if tried under any circumstances, for a treaty 
 would demand engagements which at any moment might lead 
 to the detriment or ruin of the contractors. It would be sell- 
 ing the monetary independence of a country for a system of 
 mutual dependence, of constant cavilling and of inevitable 
 risks. Seeing no danger of the adoption of the bimetallic 
 system, he considered the essential point in the monetary evo- 
 lution, the subject of real and universal interest, not the de- 
 preciation of silver, the results of which on the holders of 
 silver would be of secondary importance, but that fresh de- 
 mand for gold which would result neither from the arbitrary 
 acts of government nor from the theories of a savant, but from 
 the requirements of commerce. With a view to reaching a de- 
 cision as to the possibilities of economizing the use of gold, he 
 proposed this question to the conference : " Is there ground 
 for facilitating and for supporting by acts of legislation af- 
 fecting coinage and fiduciary circulation such economy in the 
 use of gold as the progressive adoption of the single gold 
 standard will cause the states represented in the conference to 
 feel the need of ?" 
 
 At this point Baron von Thielmann, referring to the declara- 
 tion he had made in the name of his government at the second 
 session, thought it right to remark that the declaration did 
 not contain offers made by the imperial government to the 
 powers represented at the conference. He had confined him- 
 self to uttering the opinion that perhaps the German govern- 
 ment would take into consideration concessions with a view 
 to an eventual arrangement calculated to raise the price of 
 silver. The ulterior decision of the imperial government was 
 not prejudged either by its participation in the conference or
 
 POSITION OP THE GOLD MONOMETALLIST8 299 
 
 by the observations of its delegates. He said the object of 
 this statement was not to correct any of the opinions formu- 
 lated within the conference, but to reduce to their true value 
 the exaggerated comments of a certain portion of the press. 
 
 The Portuguese delegate reviewed the history of the coin- 
 age laws in his country to disprove an assertion, he said, of 
 Cernuschi, that actual bimetallism could exist. He said that 
 the gold standard was adopted by Portugal because it found 
 that it could not at any ratio it fixed keep both metals in cir- 
 culation. Cernuschi, without replying to this argument, 
 closed the session with the remark that it had been charac- 
 terized by warnings of the perils of monometallism from Asia 
 on the one side of the world and America on the other side, 
 both urging the adoption of bimetallism, while that system 
 had been deprecated by Sweden and Portugal. He said it in 
 a manner to remind the conference how small the interests of 
 the two latter countries were compared with those of two con- 
 tinents. 
 
 Pirmez opened the discussion of the eighth session, the 
 19th of May, or just a month after the beginning of the con- 
 ference, with a reply to some of the criticisms the bimetal- 
 lists had made of his previous remarks. He said that the only 
 point governing the debate, and the only one he had treated, 
 was the possibility of establishing a fixed ratio between the 
 two metals. He denied any intention of making any propa- 
 ganda against silver and in favor of gold; or any wish to see 
 new countries adopt the gold standard or any design of nar- 
 rowing the functions of silver. He simply rejected, as contrary 
 to the nature of things, the theory of bimetallism at a fixed 
 ratio. He then pointed out the differences between the bimetal- 
 lists of the dogmatic and of the rational schools, and said the 
 conference might well leave it to them to refute each other, and 
 to show that a fixed ratio was unattainable. The dogmatic 
 bimetallism of Cernuschi, Rusconi, and Horton assumed the
 
 300 THE CONFERENCE OF 1881 
 
 omnipotence of law. While starting from an inadmissible 
 principle, they were irreproachably logical in their deductions. 
 The rational bimetallism of Vrolik and others, on the other 
 hand, started from true principles, but failed in logic. He took 
 up the arguments of the bimetallists, one by one, in an effort to 
 show that in practice they all led to the inevitable conclusion 
 a gold standard for all the great commercial nations in the 
 future. Belgium's hopes, he said, lay in that direction. 
 
 " "Will M. Pirmez kindly answer one question ?" asked 
 Count Rusconi. " What is money ?" 
 
 " It is merchandise; but merchandise weighed and verified 
 by the state," replied Pirmez. 
 
 " If the conference makes that declaration," said the 
 Count, " all debate is certainly at an end, and the law of bi- 
 metallism and of the ratio becomes absurd and impossible." 
 
 Seismit-Doda, of Italy, and Horton, of the United States, 
 each contributed arguments to the opposite view of money, 
 enlarging upon the influence of law in the determination of 
 the value and use of the metals. Cernuschi made another 
 plea for bimetallism, calling attention to the fact, which was 
 not denied, that the heads of all the great European banks 
 were favorable to bimetallism. France, he said, was not the 
 country most menaced; silver 5-franc pieces were at par with 
 gold, the budget showed no loss from the monetary disorder 
 as did the Indian budget, and, in asking for bimetallism, she 
 was only asking for the universal good. 
 
 The most striking appeal for international bimetallism 
 of this session and the closing one in the general de- 
 bate, was that of ex-Secretary Evarts. It was an able review 
 of the whole question from an international point of view. 
 He reasoned that there were only two logical methods by 
 which the disorder between gold and silver could be stopped; 
 one was to admit as the intrinsic money of the world only one 
 metallic basis, and " to drive out, extirpate, as a barbarism, as
 
 PLEA OF EX-SECRETARY WILLIAM M. EVARTS 801 
 
 an anachronism, as a robber and a fraud, the other metal, that, 
 grown old in service and feeble in its strength, is no more a 
 help, but a hinderance and a marplot "; the other was to make 
 one money out of two metals, adapted in its multiples and 
 divisions to the united functions of the two precious metals. 
 He defined the plan to divide the world into two camps, one 
 using gold and the other silver, as one of harmonious discord 
 and organized disorder. " The motion," he said, " seems to be 
 that the nations that sit above the salt are to be served with 
 gold, and those that sit below the salt are to be served with 
 silver. But who is to keep us in our seats? Who is to guard 
 against an interruption of the feast by a struggle on the part 
 of those who sit below the salt to be served with gold, and 
 of those above the salt to be served with silver ? This project 
 purports to have neither wisdom nor courage, neither reason 
 nor force behind it. It is a mere fashion of speech for saying 
 that \ve cannot, by human will, by the power of polity of na- 
 tions, redress the mischief, but that we must leave the ques- 
 tion to work itself out in discord, in dishonor, in disorder, in 
 disaster." After reviewing in an instructive manner the main 
 arguments against international bimetallism, he closed by say- 
 ing: 
 
 " In my judgment, the progress which has been made here, the 
 comparison of opinions, the indication of the interests of governments 
 behind, all point to a general desire for a good result from our de- 
 liberations, which is an augury of success, for ' where there's a will 
 there's a way.' I cannot believe that England can long occupy the 
 position of estrangement from either of the systems about which 
 we debate. The British Empire is neither monometallist nor bi- 
 metallist, but bimonometallist. The British Empire cannot be 
 monometallist gold nor monometallist silver through its length and 
 breadth. Its present position of bimonometallism is entirely in- 
 consistent with reason and with government. It must be bimetallic 
 sooner or later, for it cannot maintain the permanent position of a 
 house divided against itself, which cannot stand. At this stage, 
 then, of the deliberation, without entering into a discussion of de- 
 tails, it seems to me that the moment is most opportune and the 
 spirit most excellent for a recess for some weeks. In this interval 
 we may expect a definite and practical consideration by the various 
 governments of what the duty and interest of each require from it 
 towards the common end they desire."
 
 302 THE CONFERENCE OF 1881 
 
 The Spanish delegate then asked leave to renew his motion 
 for adjournment. In addition to the declarations he had 
 already mentioned, he called attention to the assurance the 
 British delegates gave of a friendly reception reserved by 
 their government for any suggestion tending to improve the 
 situation in the money market, and to the confirmation Glad- 
 stone had just given this sentiment in the House of Commons. 
 He believed, under the circumstances, that some kind of an 
 agreement was possible. It had at least been shown that it 
 was very desirable, for, he said, if Europe had another year's 
 bad harvest and France was obliged to import much of her 
 food from abroad, the Bank of France, not having a sufficient 
 supply of gold remaining, would have to apply to the Bank 
 of England, which, seeing its stock diminish, would have to 
 raise its rate to those panic figures which lead to incalculable 
 disaster. Then would come one of those panics from which, 
 to use the expression of an illustrious man, they could only 
 emerge by marching over corpses, and the pernicious influence 
 of which would be felt by the whole world. The question of a 
 remedy was no longer under the jurisdiction of the conference, 
 in his judgment, but of the governments it represented. He, 
 therefore, submitted this resolution : 
 
 " The conference, having listened to a general discussion, having 
 considered the monetary situation from an international point of 
 view in view of the declarations which have been made on behalf 
 of a certain number of governments, considering that several dele- 
 gates have evinced a desire for a temporary suspension of the ses- 
 sions, so as to refer to their governments, in order that the latter 
 may be in a position to pronounce on the propositions which have 
 been formulated within the conference and on the resolutions to be 
 taken for co-operating in the rehabilitation of silver Resolves, the 
 sessions of the conference are suspended from the 19th of May to the 
 30th of June next." 
 
 In the debate on this resolution the Indian delegate, Lord 
 Reay, made some extended remarks, which were evidently in- 
 spired to a great extent by the British government. The 
 English delegate seemed to be in attendance for the especial
 
 INDIA SPEAKS FOR ENGLAND 803 
 
 purpose of manifesting English reserve, whenever it appeared 
 to be called for by the circumstances, while the Indian delegate 
 was used as the instrument of encouraging the other states to 
 make a more extended use of silver, or to do anything that 
 would promise a relief for the possible gold famine in England. 
 Only by appreciating this arrangement does the concern with 
 which England was watching the developments of the con- 
 ference, and her desire to surreptitiously promote a bimetallic 
 agreement in other states, and especially to include the United 
 States, become fully apparent. With this understanding of 
 Lord Reay's position his remarks following the introduction of 
 the resolution become as significant and as interesting as the 
 declaration of the German delegate a month before. The 
 real attitudes of England and of Germany were quite similar 
 in one respect. Neither proposed to enter into any agreement 
 involving their adoption of the double standard, but both 
 were anxious to make apparent concessions so as to induce 
 some other countries to open their mints to silver. The Ger- 
 man delegate had, from the beginning, been laboring to induce 
 the conference to dispense with the theoretical discussion and 
 descend to the consideration of the inducements he had 
 offered, and to which it Avas likely England would add some- 
 thing when the opportune moment arrived. Lord Reay began 
 by expressing the opinion that, before separating, it would be 
 well to define precisely the situation in which the conference 
 found itself. He said: 
 
 " If, on the one hand, it is clear that neither monometallist nor 
 bimetallist has been shaken in his convictions, it is clear, on the 
 other, that both monometallists and bimetallists have learped to 
 respect each other. . . . With one or two slight exceptions, the 
 general inconvenience of the existing state of things has been recog- 
 nized. Its victims are to be found both in bimetallic and monometal- 
 lic countries. So far, neither of the systems has succeeded. In this 
 state of things it is clear that the concert which it is wished to es- 
 tablish must either be made between the powers which desire to 
 remain monometallist and those which are or tend to become bi- 
 metallist, or not be made at all. Coming to practical steps, it ap- 
 pears to me that, in the first place, it would be important to ap-
 
 304 THE CONFERENCE OF 1881 
 
 proach the government of His Imperial and Royal Apostolic Majesty 
 with a view to obtain its adhesion to the union which the United 
 States and the Latin Union desire to establish. The concurrence 
 of Austria-Hungary would be of the very highest importance in 
 giving to the states above mentioned a powerful support for the 
 realization of their wishes, even though Austria-Hungary should not 
 substitute specie payments for its paper money at once. 
 
 " I should like also to submit for your consideration a proposal 
 for asking the opinion of the principal banks of issue in the different 
 states. It is obvious that, even in the states which have a single 
 gold standard, these institutions could render valuable assistance 
 in the operations resulting from a resumption of the free coinage of 
 silver in other states. The eminent men who direct them, and we 
 must not forget that the Imperial Bank of Germany is directly sub- 
 ject to the Chancellor of the Empire, could remove many of the 
 difficulties which would attend the governments who undertook to 
 rehabilitate silver." 
 
 After an allusion to the theories of the bimetallists and the 
 devotion to their cause of such advocates as Cernuschi, he con- 
 tinued : 
 
 " But, gentlemen, to avoid the danger which threatens us, we 
 want something besides philosophers and philosophic theories; we 
 must have diplomacy; on our reassembling we must lend an ear to 
 the monometallic and bimetallic statesmen in order to effect a 
 modus vivendi between the powers adhering to the different systems. 
 The habits of English statesmen tend to make them consider facts, 
 to seek rather what is relatively possible than what is absolutely im- 
 possible. If it is desired to embark on the enterprise of introduc- 
 ing the bimetallic system into the United Kingdom, you cannot do 
 better than practise what you preach, and begin the task by in- 
 troducing bimetallism at home. India has suffered for the mono- 
 metallic cause ; it would be another glory for the bimetallists to ac- 
 cept, in order to inaugurate the universal reign to which they look 
 forward, the slight burden of some inconveniences, which, on their 
 own showing, will be only temporary. The surplus in the French 
 budgets and the brilliant conversion of a portion of their debt just 
 effected by the United States establish in a most remarkable manner 
 that their marvellous financial position is strong enough to permit 
 of their making the experiment of bimetallism. 
 
 " On the part of Great Britain and India, I must decline both the 
 extreme honor and the extreme disgrace which the partisans and 
 adversaries of bimetallism confer upon them when they pretend that 
 with these two empires all is possible, and without them nothing. 
 Her Majesty's government has testified on many occasions its desire 
 to create and maintain intimate relations between the different 
 powers. It is convinced that these relations are a guarantee for the 
 peace and prosperity of the nations. Its resolution not to join a 
 bimetallic convention is inspired neither by selfishness nor by a dis- 
 regard for the interest of other countries. I flatter myself, gentle- 
 men, that you will render justice to the government of my august 
 sovereign, and that you will not forget that the commerce of the 
 world enjoys in her country a freedom from duty and obstruction
 
 THE ADROIT HAND OP ENGLAND 305 
 
 which is certainly far from being either selfish or universally adopted. 
 In matters of free trade it did iiot wait for the co-operation of other 
 countries to apply principles which it believed to be true. Be as- 
 sured, also, that if you succeed in giving practical effect to the 
 principles of bimetallism without our co-operation, we shall be the 
 first to render to you the homage which has always been paid in my 
 country to any work which has for its object to draw closer the 
 bonds which unite nations. 
 
 " The great problem, gentlemen, which we have to solve cannot 
 be determined in a moment, and there is no reason for discourage- 
 ment in the conviction at which we have arrived, that all the powers 
 are not of the same opinion. It is not in ignoring the difficulty, 
 but in recognizing it, that we can overcome it. The delegates of 
 the United Kingdom, of India, and of Canada will have the honor 
 of sharing in your further labors, animated by the generous in- 
 stincts with which we have been hitherto guided, and which are 
 the best guarantee for the ultimate success of an agreement, which 
 will not, perhaps, realize all the dreams of theory, but which will be 
 worthy of the statesmen from whom we ask it and on whose co- 
 operation alone it depends." 
 
 The adroit hand of England, fearful that nothing would 
 be done for silver by somebody else, is apparent in every line 
 of this remarkable statement. Nothing but a fear that Austria 
 might produce a crisis by resolving to resume specie payments 
 in gold could have suggested the special desirability of her 
 becoming attached at that time to a union for the free coin- 
 age of silver. The suggestion of securing the opinion of the 
 heads of the banks of issue will be explained in the proceed- 
 ings of the conference after its reassembling. The Bank of 
 England would offer to hold a fifth of its reserves in silver. 
 The remainder of the speech is an argument to show that 
 France and the United States were strong enough to assure 
 the success of a bimetallic convention, or at least to make the 
 experiment. Nothing would have suited England better than 
 such an experiment the opening of our mints and those 
 of the Latin Union to silver, and the assurance that Austria 
 would not undertake to introduce a gold standard. Germany's 
 hopes were of the same character. The concessions the latter 
 offered would have made the complete accomplishment of her 
 monetary reform slow work, but unless something was done 
 it seemed absolutely impossible, even in the remote future. 
 20
 
 306 THE CONFERENCE OF 1881 
 
 After some unimportant debate as to the proper length of 
 the suspension of the conference, the resolution of the 
 Spanish delegate was adopted. It was voted, also, to ask the 
 different governments to secure the opinion of the large banks 
 of issue. The United States delegates were asked to learn 
 what steps could be taken in their country to have gold and 
 silver placed on the same footing in the banks, which were 
 then discriminating against the new silver dollars, and the 
 conference adjourned. 
 
 The intermission of six weeks resulted in some interesting 
 developments, but in nothing practicable. The attitudes of 
 the powers, whose co-operation was necessary, did not furnish 
 ground for great expectations. Desirous as the United States 
 and France were for an agreement favorable to silver, they 
 were not disposed to take up with professed concessions which 
 really conceded nothing, but in themselves constituted a re- 
 fusal to co-operate. Anxious as England and Germany were 
 that the United States, the Latin Union, and Austria should 
 agree to open their mints to silver, they did not propose to 
 yield any of the essentials of their monetary systems so long 
 as there was reason for hoping that a bimetallic arrangement 
 would result without further inducements from them. Cer- 
 nuschi had, unfortunately, in one of his speeches afforded 
 ground for such a hope, though without intending it. In the 
 fifth session, while expressing the wish for real bimetallism, he 
 had said : " It is practicable with four states, with three, or 
 even with two. Yes, the bimetallic union would be supreme in 
 the world even if composed only of the United States and 
 France." This was a remarkable statement to follow his an- 
 nouncement at the outset of the conference that, failing the 
 co-operation of Germany and England, or, at least, one of 
 them, bimetallism would be impracticable. Cernuschi was 
 strong in bimetallic polemics, but he was not a diplomat, and 
 the German and English delegates might reasonably have
 
 THE CONFERENCE REASSEMBLES 307 
 
 inferred, even if they did not, that a limetallisme a deux 
 would be adopted whether they made concessions or not. Ex- 
 Senator Howe had afforded them no such consoling hope in his 
 remarks when he said that he had listened to the so-called 
 concessions with interest, but without sympathy, and that it 
 was a mistaken kindness to make such offers, inasmuch as the 
 United States were not seeking a market for a depreciated 
 metal; but this need not have changed the opinion of the 
 English and German delegates, who knew that Howe was dip- 
 lomatic and that Cernuschi was not. The suspension of the 
 proceedings gave the American and French delegates time 
 to consider and to conclude that the offers of the English and 
 German governments were insufficient. The latter occupied 
 the time in the expectations that their offers would suffice, 
 though England had something in the shape of an inducement 
 in reserve. When, therefore, the conference reassembled on 
 June 30, each side was uncertain what course the other would 
 adopt. 
 
 The president, in calling the conference to order, asked 
 it to fix the order of its proceedings, the general discussion 
 having been completed. At the beginning it had been deter- 
 mined to follow the general discussion with a consideration of 
 each question separately; but, while this might be done, he 
 thought that after a separation of six weeks, and particularly 
 after the governments had been informed concerning the situa- 
 tion in the conference, it would be well to adjourn for a day or 
 two, that the delegates, in private conversation, might ex- 
 change views and settle their course. The suggestion was 
 supported by the Governor of the Bank of France, and was 
 adopted. All parties were desirous of learning the exact situa- 
 tion before saying much. 
 
 Several replies to questions propounded by Cernuschi and 
 others in the earlier proceedings were submitted at this session, 
 but the most important document laid on the table was a com-
 
 308 THE CONFERENCE OF 1881 
 
 munication from Moritz Levy, the Danish delegate, to the 
 president of the conference. It attracted little attention at 
 this time, but became one of the subjects of special considera- 
 tion eleven years later, at another conference. Levy had said 
 very little in the debate, but evidently had given the prac- 
 tical phases of the question much thought. As private busi- 
 ness prevented his return to Paris to participate in the later 
 deliberations, he wrote a letter embodying his views. 
 
 He had not been able, he said, to persuade himself of the 
 advantages of bimetallism, but he was not prepared to deny 
 that the existing situation might lead to difficulties, if pro- 
 longed for any considerable time. The fall in the price of 
 silver, he admitted, constituted an obstacle to the development 
 of commercial relations between many countries of Europe 
 and the countries of Eastern Asia, and an increasing difficulty 
 to those countries having a large amount of silver in their cir- 
 culation. The scarcity of gold he could not deny, and he 
 feared that the existing stock, together with the annual yield, 
 would not be enough to allow of Europe submitting longer to 
 so heavy an exportation of this metal as had been witnessed for 
 the previous three years without compelling a resort to meas- 
 ures necessary in periods of monetary crisis. This being the 
 situation, the only remedy he could suggest would be a more 
 restricted use of gold and a more extended use of silver. In his 
 opinion, silver must become in a much greater degree a neces- 
 sary part of the circulation needed for the smaller domestic 
 business of each country, while gold must serve only as the 
 metallic reserve, guaranteeing the notes of banks issued in 
 larger sums, and as the means of settlement in international 
 transactions. Both of these objects, he thought, would be at- 
 tained if all the states represented at the conference, or, at 
 least, the seven great powers, France, England, Germany, Rus- 
 sia, Austria-Hungary, Italy, and the United States, would 
 unite in the adoption of the following measures :
 
 THE LEVY PLAN 309 
 
 I. Retire from circulation all notes of a nominal value of 
 less than 20 francs, or an amount corresponding thereto in 
 other denominations. 
 
 II. Retire from circulation all gold pieces of less than 20 
 francs. 
 
 While the principle of Levy's plan was not new, he car- 
 ried it further, proposing to give it a wider application. Ger- 
 many had expressed a willingness to withdraw her 5-mark 
 gold pieces, and the Russian delegate had suggested that the 
 measure be extended to gold coins corresponding to the 10- 
 franc and 10-mark pieces, but Levy considered that such an 
 operation, undertaken by itself, would prove insufficient un- 
 less accompanied by the withdrawal of all small notes, for he 
 had found that silver was driven away much more by small 
 bank notes than by little gold pieces,. Unless the notes were 
 withdrawn, the gold turned into the reserves would be likely 
 to be replaced by more notes, instead of silver; but if with- 
 drawn and their place taken by silver, the burden on the re- 
 serves would be lightened and more gold made available for in- 
 ternational settlements. He estimated the notes having a face 
 value less than 20 francs in circulation in the seven great coun- 
 tries as follows: 
 
 50.000,000 francs. 
 
 430,000,000 " 
 
 1,000,000,000 " 
 
 559.000,000 " 
 
 230.000.000 " 
 
 Germany, notes of 5 marks, 
 Austria-Hungary, notes of 1 and 5 florins, 
 Russia, notes of 1, 2, and 3 troubles, about 
 Italy, notes of %, 1, 2, 5, and 10 francs. 
 United States, notes of 1 and 2 dollars, . 
 
 Total 2,269,000,000 " 
 
 Making allowance for the gold pieces that had been melted 
 down or exported, he estimated the amount in circulation to 
 be: 
 
 Germany, pieces of 5 and 10 marks, . . 250,000,000 francs. 
 France (with Belgium and Switzerland), 5 
 
 and 10 francs, . . . . . 600,000.000 
 
 England, half-sovereigns 450.000.000 " 
 
 United States, pieces of 1 and 2% dollars, . 250.000.000 
 
 Total, . . . 1,550,000,000 "
 
 310 THE CONFERENCE OF 1881 
 
 Allowing for the fact that a portion of the small gold 
 pieces retired would be replaced by gold coins of larger de- 
 nomination, and that notes representing larger amounts might 
 take the place of the small notes withdrawn, Levy calculated 
 that the plan would necessitate a new currency of silver coins 
 to the extent of two milliards of francs, at least, and he thought 
 that this might not only stop the fall of the price of silver, 
 but cause a progressive rise to the former ratio. To meet 
 the objection that it would require people to carry about 
 with them a great weight of silver to make daily transactions, 
 he suggested that silver notes should be issued, secured by a 
 corresponding amount of the metal. The result would be, 
 therefore, that notes redeemable in silver would, in some coun- 
 tries, be substituted for notes redeemable in gold. 
 
 One feature of the plan, possibly suggesting the reason for 
 the lack of consideration given it by the conference, will be 
 readily noticed. Kearly 90 per cent, of the notes to be with- 
 drawn were in countries then on a paper basis, and the effect 
 would have been to have put these countries on a silver basis, a 
 step which they had deliberately avoided by suspending the 
 coinage of silver when it fell below the value of their depre- 
 ciated notes. Moreover, France would have been compelled to 
 substitute silver or silver notes for nearly 600,000,000 francs of 
 small gold coins when her currency was already glutted with 
 silver. 
 
 Among the letters received, in response to the resolution 
 of the eighth session calling for expressions of opinion from 
 the banks of issue, was one from the officers of the Bank of the 
 ISTetherlands, headed by Mees, who had been a member of 
 the conference of 1867, pointing out the serious difficulties of 
 the situation, and declaring their opinion that the establish- 
 ment of the double standard over a greater extent of territory 
 would be the only efficacious remedy. The Governor of the 
 Bank of Belgium, on the other hand, said that the opinion of
 
 MR. THURMAN'S OPINION OF THE ALLEGED CONCESSIONS 311 
 
 the council of that institution was exactly what it had been in 
 1873 in favor of the single standard of gold. 
 
 The adjournment of the conference to enable the dele- 
 gates to discover what new features there were in the situation 
 did not entirely remove the uncertainty as to the plans of the 
 British and German governments. The latter was waiting to 
 see what the former might propose, and both were coyly wait- 
 ing to discover how far the advocates of bimetallism might go. 
 At the tenth session, on July 2, it became sufficiently clear that 
 each side had waited for the other. Seismit-Doda, of Italy, ad- 
 vocated the abandonment of the discussion of the question- 
 naire, so that a systematic effort might be made to find out in 
 what way, if any, the declarations of the various governments 
 made at the earlier sessions had been supplemented. It was 
 finally agreed that whatever discussion took place on the ques- 
 tionnaire should be confined to the last two questions the 
 measures to be taken to reduce the oscillations of the two 
 metals and to establish a fixed ratio between them. Ex-Sena- 
 tor Thurman took the floor, and quickly turned his attention 
 to the German and Indian proposals. He said that, while 
 the American people believed that the existing monetary sys- 
 tems of the world greatly needed reformation, and that one of 
 the most effective, if not the most effective, reform that could 
 be made would be the adoption of bimetallism, yet they were 
 too well informed not to know how slow was the progress that 
 truth often made, and that it was seldom the part of wisdom to 
 reject what was attainable and reasonable at the time because 
 it fell short of something better and more desirable. He 
 thought, therefore, that, in view of the conflicting opinions of 
 states and statesmen, his government would not probably feel 
 it to be its duty to reject any and every proposition that came 
 short of perfect bimetallism. It could afford to march step 
 by step instead of insisting on reaching the goal at a single 
 bound.
 
 312 THE CONFERENCE OF 1881 
 
 " But, if we be invited to halt at a half-way house and tarry in it 
 for a season, we must, before we accept the invitation, be well as- 
 sured that the tenement is not a dangerous one for us to occupy. 
 Now here, as it seems to me, lies the chief obstacle to the accept- 
 ance of the propositions in question. Each of the propositions, as I 
 understand it, requires that the United States and France, and, per- 
 haps, the chief states of the Latin Union, shall open their mints 
 and keep them open for the free and unlimited coinage of silver into 
 money having full legal-tender qiiality. It is not for me to say what 
 France, or the states of the Latin Union, or other states of Europe 
 here represented may think of such propositions. Their delegates 
 will answer for themselves, if they see fit to do so I can speak in 
 reference to my own government alone. Would such an agreement 
 as that proposed be acceptable to the United States? I am bound, 
 speaking frankly, to say that I think it would not. There is a great 
 and vital difference between a grand bimetallic union that, by fixing 
 and maintaining a stable relation between gold and silver, would 
 stop, or at least powerfully tend to stop, the efforts so often made 
 to drain a state at one time of one of the metals and at another time 
 of the other, and a little and half-way union that might leave each 
 state liable to a recurrence of such drains. Now, if I understand 
 the views of my government and of the American people, they do 
 not desire an alternative standard, gold to-day and silver to-morrow, 
 nor a single standard, whether of gold or silver, and certainly not 
 the single silver standard. Their stock of silver money is less in 
 proportion to the wealth and population of the country than that of 
 most commercial nations, while, on the other hand, their stock of 
 gold is very large, is steadily increasing day by day, and is likely, 
 unless prevented by some blunder, to continue to increase. Under 
 such circumstances, it is but natural that the government should 
 hesitate to enter into an agreement the effect of which might possibly 
 be to lessen the amount of our gold. It would cheerfully become 
 a party to a great bimetallic union which, if formed, would, of 
 course, open to its mints to the free coinage of silver ; but I must be 
 permitted to doubt whether, without such a union in existence, it 
 will, by convention, surrender its power over its own coinage. 
 
 " In saying this I would not be understood as underrating the 
 importance of the German and English propositions. I consider 
 them as steps in the right direction, and entitled to the most re- 
 spectful consideration; but, in my judgment, they fall far short of 
 what the exigency requires, and I see no probability of their accept- 
 ance." 
 
 This statement, which had been carefully prepared, evi- 
 dently represented the position of the entire delegation from 
 this country. Its character may have been somewhat mod- 
 ified by a desire to draw further concessions from the German 
 and English delegates, for there was a strong suspicion that 
 they were holding something back. Nevertheless, it was in 
 the main a true statement of the position of the United States 
 government, which looked upon bimetallism without the co-
 
 CERNUSCHI RESENTS A GERMAN INTIMATION 813 
 
 operation of all the commercial nations as impracticable. It 
 was the persistency of the silver advocates in Congress that 
 gave the Europeans a different idea and sustained them in 
 their attitude of reserve. 
 
 Thurman was followed by Schraut, of Germany, who re- 
 hearsed the serious features of the scarcity of gold, and then, 
 apparently for the purpose of relieving Germany of any moral 
 responsibility for the fall of silver, and of intimating that other 
 powers should bear the brunt of its rehabilitation, argued that 
 the suspension of the coinage by the Latin Union had been 
 the chief cause. To be sure, he said, that suspension was 
 brought about by the sales of silver attempted by Germany 
 but a sensible and persistent depreciation of the white metal, he 
 held, would have remained impossible as long as the Latin 
 Union really accepted it at a fixed price for coinage. The 
 union acted as a regulator, and, when that was destroyed, there 
 was nothing to prevent its fluctuations and decline. This 
 aroused the warm nature of Cernuschi, who had apparently 
 made up his mind that Germany had, from the beginning, 
 been endeavoring to entrap the conference with its proposi- 
 tions. He said that nobody could be mistaken as to the feel- 
 ings animating him, when, after acknowledging the loss sus- 
 tained by the German empire from the demonetization of its 
 silver coin, and after having proposed to reimburse her for that 
 loss, he protested against the accusation thrown out against, 
 the Latin Union by the German delegate. If Germany had 
 not endeavored to appropriate tho legal monometallism of 
 England, Erance would have continued to coin the two metals 
 freely. Soetbeer, he said, had always desired to cast upon 
 France the responsibility for the monetary disorder, but it 
 was Germany who made the beginning. Germany had sup- 
 posed that she could become monometallic by pouring all 
 her silver into France and draining her of gold at 15.50 to 1; 
 and, in doing this, prevent a loss to the imperial treasury.
 
 314 THE CONFERENCE OF 1881 
 
 " There is a desire," he added, with considerable animation, 
 " to resume this plan, and this is the object of these pretended 
 concessions, which consist in reducing the exportation of Ger- 
 man silver, but in exporting it gradually into the countries of 
 the Latin Union and in taking gold for it at 15.50 to 1. Even 
 the proposed recoinage of her silver pieces into smaller pieces 
 at the 15.50 rate would lead to this final result." Cernuschi 
 intimated that such a purpose lay underneath the proposition, 
 and that France would not regard it as a concession. 
 
 The point was not debated further, but Baron von Thiel- 
 mann, who evidently interpreted the unfavorable expressions 
 from the French and American delegates as a diplomatic sally, 
 arose and said that he had received the impression that a fresh 
 declaration was expected from him, but he had nothing to add 
 to what he had stated at the first meeting. Sir Charles Fre- 
 mantle, however, then presented a letter written two weeks 
 before by Sir Alexander Gait, the Canadian delegate who had 
 not returned to the conference, to the effect that, if the 
 United States adopted bimetallic legislation in accord with 
 Europe, it would be the interest and policy of Canada to fol- 
 low the same course. He also announced that he had just re- 
 ceived instructions which would enable him to make a com- 
 munication to the conference at the next session. The English 
 delegates were obviously disturbed over the declining pros- 
 pects of an agreement, to which it would not become a party. 
 
 Dumas opened the eleventh session, on July 4, with an able 
 address upon the historical relations of gold and silver, and 
 their natural places in the currency, but without any refer- 
 ence to any propositions short of bimetallism except in ad- 
 vising that, if steps in that direction were taken, the smaller 
 gold coins should be withdrawn from circulation ; " silver 
 should be the coin of the population which labors and produces, 
 a population," he said, " for which gold is so often a chimera, 
 and silver the daily bread and the safeguard of the morrow."
 
 GERMANY USES FURTHER ARGUMENT 815 
 
 Schraut, the German delegate, again spoke for the apparent 
 purpose, this time, of encouraging the idea advanced by Dumas 
 of giving silver a greater place in the small coinage. Coming 
 from a German delegate, the statement was rather significant. 
 He said : 
 
 " I do not dispute that the re-establishment of the free coinage 
 of gold and silver at a fixed raiio, in a certain group of states, 
 would raise the price of silver to the rate corresponding to that ratio, 
 and that its future oscillations would be but insignificant. Acci- 
 dental perturbations would be the less to be feared if we suc- 
 ceeded in guaranteeing the mints against an unforeseen and extraor- 
 dinary influx of the white metal. The best means, in my opinion, 
 of arriving at this object would be to make the use of silver general 
 in all countries, as remarked by several of our honorable colleagues 
 in the course of our first sessions. 
 
 " The first step would be taken in this path, if all the states 
 which have issued paper money notes below 20 francs would call 
 them in and replace them by silver money. I reckon among these 
 states not only the states with forced currency paper money, but 
 also the United States of America, which have issued a considerable 
 quantity of one and two dollar notes. It would also be expedient, 
 as our illustrious colleague, M. Dumas, has shown, to do away with 
 the small gold coins, and to replace them by silver, the consumption 
 of which would be augmented in direct proportion to the withdrawal 
 of small notes and of small gold coins." 
 
 Following this evident effort to draw France and the 
 United States into an agreement, Sir Charles Fremantle an- 
 nounced that he w y ould defer till the nest session the communi- 
 cation he had expected to be able to make at this meeting. 
 
 In submitting some statistics of France as to the quantity 
 of the precious metals used in the arts, in response to questions 
 propounded by Lardy, of Switzerland, earlier in the confer^ 
 ence, Cernuschi said he would not omit calling attention to the 
 strange position of the partisans of gold, who, perplexed and 
 uneasy, were forced to institute inquiries to ascertain whether 
 there was not too great a consumption for industrial purposes 
 of the metal on which they made their whole economic life 
 depend. Bimetallism, he said, had none of these perplexities 
 and troubles. He also took occasion to say that all the meas- 
 ures which had been commended as half-measures could serve 
 for nothing. The session closed with a declaration from the
 
 816 THE CONFERENCE OF 1881 
 
 Netherlands delegate, submitted, Pierson said, in obedience to 
 instructions from his government, which considered it advan- 
 tageous that the different governments should be enlightened 
 as to their intentions. It was as follows : 
 
 " The government of the Netherlands is of opinion, like several 
 members of this conference, that the fall of silver and its great 
 oscillations of value are a great evil. 
 
 " It also thinks that the simultaneous and unreserved adoption 
 of the double standard by all the great states of Europe and America 
 would be the true means of remedying that evil. 
 
 " It would scarcely hesitate, therefore, to propose to the States- 
 General the re-establishment of the unlimited coinage of silver, at 
 present prohibited, both for our country and for all its colonies, as 
 soon as the double-standard system should have been adopted over 
 an area as vast as that which we have just indicated. 
 
 " But our government would not engage to act thus if that sys- 
 tem be established only over a more restricted area. As long as it is 
 ignorant what guarantees would be given for fixing, as far as 
 possible, the ratio of value between the two metals, what states 
 would adopt the bimetallic system, and what concessions Avould be 
 made by the other states for facilitating its success, it is impossible 
 to judge of the advantages and inconveniences there would be for 
 the Netherlands and its colonies in re-establishing the unlimited 
 coinage of silver, even maintaining the legal ratio between that 
 metal and gold, which is now not 15%, but 15%. 
 
 " While, however, reserving its entire liberty, the government 
 of the Netherlands does not peremptorily reject any project of estab- 
 lishing the double-standard system in an area comprising only 
 several great states of Europe and America. Such a project, if pro- 
 posed at the conference, would doubtless be taken into very serious 
 consideration by the Netherlands." 
 
 At the opening of the twelfth session, Seismit-Doda said, 
 on behalf of Italy, that it had hoped for decisive resolutions 
 from the suspension of the conference, and it was prepared to 
 enter upon the path of free and unlimited coinage of silver, 
 provided Germany and England would also enter upon it un- 
 reservedly. But that now seemed to be doubtful, and he could 
 only make known what his government would do. He wished 
 to do so before the English delegate read his promised commu- 
 nication, so as to show, he said, that his government's offer 
 was entirely independent of what the English delegate might 
 declare. He then stated that the Italian government would be 
 disposed to enter into a league of various states, to agree upon 
 the limited coinage of silver, on the condition that the Ger-
 
 CONCESSION OP THE BANK OP ENGLAND 817 
 
 man government would engage to suspend the sale of its silver 
 for at least five years, and to replace the gold 5-mark pieces 
 and its imperial treasury notes by silver money, and also admit 
 for silver coins the ratio of 15.50 to 1, conferring on all the 
 silver thus coined the full paying power possessed by the old 
 thalers; and on the further condition that England would 
 enter into an engagement with the other states to increase the 
 paying p_ower of its silver crowns. If these conditions were ac- 
 cepted by Germany and England, Italy might agree with 
 the other states of the Latin Union and with the United 
 States in resuming the limited coinage of silver for a term 
 not to exceed that fixed for the suspension of sales by Ger- 
 many. The quota of silver coinage for each state, according 
 to Italy's plan, should be based on the population. 
 
 The British delegate then read the following declaration: 
 
 " In pursuance of the announcement made to the conference at 
 last Saturday's session, I have the honor of making the following 
 communication on behalf of my government: 
 
 " The United States Minister at London, after a conversation 
 with Her Majesty's Secretary of State for Foreign Affairs, having 
 expressed an opinion that it would be possible to arrive at an agree- 
 ment between the other powers on the monetary question, if (inter 
 alia) the Bank of England should agree to exercise the option al- 
 lowed it by the Bank Charter Act of 1844 (7 and 8 Viet, c. 32, ss. 2 and 
 3), and if the Treasury would put a question to that effect to the 
 bank directors, Lord Granville applied to that department, and 
 through that medium obtained a reply from the bank directors. 
 
 " In this reply the bank declares its readiness to exercise the 
 above-mentioned option, on condition of the mints of other nations 
 reverting to the observance of rules insuring the exchange of gold 
 for silver and of silver for gold at a legal rate. 
 
 " Her Majesty's government, having subseqiiently learned that 
 Mr. Lowell's action was in no way the result of instructions from 
 his government, did not deem it proper to follow up the declaration 
 of the Bank of England by communicating it to the conference 
 through its delegate. A similar proposal having, however, within 
 the last few days, been submitted by His Majesty's, the King of 
 Italy's, Ambassador at London, on behalf of his government, Her 
 Britannic Majesty's government has promptly given it the respect- 
 ful reception it will always accord to the representative of one of 
 the great powers of Europe. 
 
 " I have, therefore, the honor of laying on the table of the con- 
 ference the very words used by the Bank of England in the above- 
 mentioned comnmnication: 
 
 " ' The Bank Charter Act permits the issue of notes upon silver,
 
 318 THE CONFERENCE OF 1881 
 
 but limits that issue to one-fourth of the gold held by the bank in 
 the issue department. The purchase of gold bullion is obligatory 
 and unlimited, the purchase of silver bullion is discretional and 
 limited, the distinction being enforced by the necessity of paying all 
 notes in gold on demand. The reappearance of silver bullion as an 
 asset in the issue department of the Bank of England would, as is 
 understood by the Foreign Office letter, depend entirely on the re- 
 turn of the mints of other countries to such rules as would insure 
 the certainty of conversion of gold into silver and silver into gold. 
 The rules need not be identical with those formerly in force; the 
 ratio between silver and gold and the charge for mintage may both 
 or either of them be varied and yet leave unimpaired the facility 
 of exchange, which would be indispensable to the resumption of 
 silver purchases by a bank of issue, whose responsibilities are con- 
 tracted in gold. Subject to these considerations, the Bank Court are 
 satisfied that the issue of their notes against silver within the letter 
 of the act would not involve the risk of infringing that principle 
 of it which imposes a positive obligation on the bank to receive gold 
 in exchange for notes and to pay notes in gold on demand. The 
 Bank Court see no reason why an assurance should not be conveyed 
 to the monetary conference at Paris, if their Lordships think it de- 
 sirable, that the Bank of England, agreeably with the act of 1844, 
 would be always open to the purchase of silver under the conditions 
 above described.' " 
 
 This, apparently, was the " inducement " which England 
 had been holding back in the hope that Germany's concessions 
 would satisfy the United States and France. Taken with the 
 statement of the Italian delegate, it introduced a new phase 
 of the question, and the members were in some doubt as to its 
 precise effect or bearing. Pierson, of the Netherlands, called 
 attention to the inevitable reservations in all the propositions, 
 and asked why it was that the Bank of England was not dis- 
 posed to buy silver ingots without stipulating the formation 
 of a bimetallic league. He admitted that the question was 
 nai've. How could they expect the bank to buy a metal 
 treated throughout Europe as proscribed, as a pariah? For 
 that metal to enter, in the regular way, into the metallic stock 
 of the bank, its value must be steady; "but observe," said 
 Pierson, " how important the declaration is from the theoreti- 
 cal standpoint. The great question which divides us is this: 
 ' "Will the adoption of the double standard by a large number 
 of states have the effect of rendering the price of silver stable 
 as expressed in gold ? ' We say, ' Yes ' ; our opponents say, l No,
 
 ENGLAND'S ILLOGICAL POSITION 319 
 
 the effect of a bimetallic league will never be such; your prin- 
 ciple is unsound; you are going against the nature of things; 
 the ratio of the value between gold and silver is regulated by 
 causes with which law has scarcely anything to do.' Now, 
 here is the British government coining and placing itself on our 
 side, inasmuch as it approves of the bank taking a measure 
 which, I say this on the strength of experience gained in a 
 practical career, would be the greatest absurdity, would be 
 most prejudicial to the bank's own shareholders, unless the 
 adoption of the double standard had the effect of making the 
 price of silver stable." This was turning the table very 
 cleverly upon the monometallists, for, as Pierson pointed out, 
 the proposal even went further, from this theoretical view, than 
 did the leading bimetallists, who refused to admit that a bi- 
 metallic league would have the desired effect on the value of 
 silver unless the league was a general one and included Eng- 
 land ; but in their anxiety to have France and the United States 
 form a bimetallic union both England and Germany had ad- 
 mitted, through their delegates, that, in their opinion, such a 
 union would make the price of silver stable. Pierson followed 
 up to his advantage in this way : 
 
 " This, then, is what I would say to England: You are friendly, 
 but you are not logical. If you really believe that the double-stand- 
 ard system can make the price of silver stable, why do you refuse us 
 your co-operation? If you accord it, the present situation would 
 immediately change from top to bottom. The Netherlands, as is 
 seen by the declaration I have made, would scarcely hesitate to 
 adopt bimetallism. France, the United States, and Italy would be 
 quite disposed to do the same ; in short, a union would very soon 
 be formed, comprising the most important commercial countries, 
 and I cannot believe that Germany would refuse to form part of it. 
 You have but to utter a word and the thing is done. Others are 
 hesitating only because they are afraid of failing without you. 
 Look, moreover, at the probable, or, at least, possible, effects of your 
 refusal. The limping standard countries cannot permanently 
 maintain that system which is contrary to the simplest, the most 
 elementary rule, viz.: that the legal value of money should not be 
 above its value as metal. The United States will not go on coining 
 silver; they will adopt the single gold standard. Italy will do the 
 same, as, also, Austria, as soon as she emerges from forced currency. 
 Do you realize what all this means? It means fall of silver, your
 
 320 THE CONFERENCE OF 1881 
 
 Indian money, and rise of gold, your home money. It means entire 
 derangement of prices, monetary confusion, commercial chaos. We 
 are told, in the end, order will be re-established. Indeed, order 
 always ends by being re-established, but is this a reason for not fear- 
 ing revolutions? .... The situation is serious. On you depends 
 whether the evil assumes enormous proportions or is entirely re- 
 moved." 
 
 The French and American delegates, after a full examina- 
 tion of the situation, decided that nothing could result till the 
 stress of circumstances had become more severe in Great Brit- 
 ain and Germany. That this increased stress would come they 
 had no doubt, and they calmly expected that after a while the 
 stubborn powers would yield, like Pharaoh after a few more 
 plagues. The conference met for its thirteenth session on 
 July 8, therefore, having been given to understand that the 
 time had come to consider an adjournment, and ex-Secretary 
 Evarts, on behalf of the delegates of France and the United 
 States, read the following declaration : 
 
 " 1. The depreciation and great fluctuations in the value of 
 silver relatively to gold, which of late years have shown themselves 
 and which continue to exist, have been and are injurious to com- 
 merce and to the general prosperity, and the establishment and 
 maintenance of a fixed relation of value between silver and gold 
 would produce most important benefits to the commerce of the world. 
 
 " 2. A convention, entered into by an important group of states, 
 by which they should agree to open their mints to free and unlimited 
 coinage of both gold and silver, at a fixed proportion of weight be- 
 tween the gold and silver contained in the monetary unit of each 
 metal, and with full legal-tender faculty to the money thus issued, 
 would cause and maintain a stability in the relative value of the 
 two metals suitable to the interests and requirements of the com- 
 merce of the world. 
 
 " 3. Any ratio, now or of late in use by any commercial nation, 
 if adopted by such important group of states, could be maintained; 
 but the adoption of the ratio of 15.50 to 1 would accomplish the 
 principal object with less disturbance in the monetary systems to be 
 affected by it than any other ratio. 
 
 "4. Without considering the effect which might be produced 
 towards the desired object by a lesser combination of states, a con- 
 vention which should include England, France, Germany, and the 
 United States, with the concurrence of other states, both in Europe 
 and on the American continent, which this combination would as- 
 sure, would be adequate to produce and maintain throughout the 
 commercial world the relation between the two metals that such 
 convention should adopt." 
 
 President Magnin then informed the conference that a
 
 PROROGATION OP THE CONFERENCE 321 
 
 considerable number of delegates of the invited powers had 
 expressed a desire in private conversation to have the con- 
 ference suspend its labors again and adjourn to some later 
 date. If the idea should be favorably entertained, the delega- 
 tions of France and the United States would submit resolutions 
 to that effect. The delegate from Sweden at once objected on 
 the ground that it would exceed diplomatic decorum to give so 
 much permanence to the meetings without consulting the re- 
 spective governments, and that it would do no good. The 
 proposed prorogation would, in his opinion, signify nothing, 
 unless a hope of inducing the United States to change its mind 
 as to bipartite bimetallism, or the German and English govern- 
 ments to change their minds as to universal bimetallism; he 
 considered that it would be better to at once acknowledge that 
 the project of bimetallism, failing the adhesion of certain 
 states, had collapsed, and that the conference could only fol- 
 low the example of that of 1878, and declare the necessity 
 of maintaining the monetary function of silver as of gold. 
 
 Baron von Thielmann desired the submission of a resolution 
 of prorogation, so that its grounds might be more intelligently 
 discussed, and after a twenty minutes' intermission the French 
 and American delegations submitted resolutions to the effect 
 that, considering the declarations made in the name of several 
 states, all admitting the expediency of taking various meas- 
 ures in concert, there was ground for believing that an un- 
 derstanding might be established between the states, but that 
 it was expedient to suspend the meetings, for the situation 
 as to some states might call for the intervention of government 
 action, thus affording a reason for giving the opportunity for 
 diplomatic negotiations. It was, therefore, proposed to ad- 
 journ to April 12, 1882. The resolution was supported by 
 the Governor of the Bank of France, who said that both the 
 delegates of his country and the United States concurred in 
 
 recommending it. The Belgian delegate announced that he 
 21
 
 322 THE CONFERENCE OF 1881 
 
 should support the proposition because it offered advantages, 
 and would involve no inconvenience, and Lord Reay, the Ind- 
 ian delegate, doubtless expressed the opinion of the English 
 government when he said that there had been many proofs of 
 the desire of the different governments to arrive at an interna- 
 tional modus Vivendi without cherishing the hope of carrying 
 out a universal system, and that it was allowable to expect 
 that Austria and Russia would offer their powerful co-opera- 
 tion for the rehabilitation of silver. He hoped that the French 
 and American governments would be able at the adjourned 
 conference to offer a programme, giving the labors a practical 
 direction, and lie considered it especially desirable that the pro- 
 gramme should be kept within the limits imposed by the action 
 of governments, and not aim at the adoption of an absolute 
 theory not previously sanctioned by the governments, for the 
 theorists who voted for the motion of adjournment would 
 practically acknowledge that the question remaining was not 
 the application of an economic thesis, but the discovery of a 
 rapprochement for escaping the risks of a terrible crisis. The 
 delegates of Austria and of Norway also supported the motion, 
 and it was unanimously adopted. After the exchange of 
 courtesies the conference adjourned, never to reassemble for 
 the practical purposes it had in view.
 
 CHAPTER VII 
 
 SILVER COINAGE IN THE UNITED STATES AND PROTECTIVE MEASURES IN 
 EUROPE THE STRUGGLE FOR GOLD 
 
 LITTLE need be said in the way of review of the character of 
 the conference. The disposition of the delegations of the 
 different governments has been revealed in the brief survey 
 of the course of the deliberations in the last chapter. It must 
 always be remembered that the participants in any event view 
 its features from a different standpoint, and in a different at- 
 mosphere and light, from those who are removed by space and 
 time. We can now observe it from the vantage-ground of an 
 intervening- experience, and, able to examine -in its totality 
 what the delegates could only discern in its growth, we can 
 more easily note the character of motives which were then dis- 
 guised and not wholly discovered. In interest and importance 
 the conference of 1881 surpasses others in the bimetallic series. 
 It took place at a time when the doctrine of international bi- 
 metallism had apparently reached its highest practical develop- 
 ment. ]^ever before or since have so many states affirmed its 
 practicability, or has there been such a general desire to ac- 
 complish something. Though speculations may be idle, it 
 seems safe to say that but for the continuing uncertainty of 
 what France, and especially the United States, would do in 
 default of an immediate agreement with other states, some- 
 thing substantial might have resulted. If the delegates of the 
 United States could have been able to assert that, failing in 
 an agreement which would include England and Germany, 
 their government would at once repeal the silver coinage act 
 and await the time when an agreement was possible; if Aus-
 
 324 THE STRUGGLE FOR GOLD 
 
 tria would have definitely announced that, in case England and 
 Germany adhered to the gold basis, she would, thenceforth, 
 take steps to adopt it; if Russia had been ready to say that in 
 a few years it would proceed to amass a great stock of gold, 
 it is doubtful if England and Germany, in view of circum- 
 stances then existing, would have dared to stand in the way 
 of a union which included them. They, at least, would not 
 have contented themselves with playing upon the bimetallic 
 desires of France and the United States with inconsequential 
 concessions. 
 
 As it was, they were too seriously concerned to uphold a 
 single doctrine of the old gold monometallism, but threw 
 them all away in their eagerness to show that bimetallism was 
 possible and practicable with only France and the United 
 States to back it. They practically admitted every bimetallic 
 argument. They were even more pronounced than others in 
 their portrayal of the extreme dangers of the situation; they 
 freely admitted the appreciation in the value of gold, the 
 possibility of a fixed ratio and the rehabilitation of silver. 
 Even if the Belgian delegate denied this, it made little differ- 
 ence when the English and German delegates frequently em- 
 braced opportunities to affirm it. Because they still had 
 hopes that a bimetallic agreement with the United States and 
 France as a centre would eventuate, they held off, and at any 
 time during the next six years a bimetallic agreement includ- 
 ing England and Germany would have been possible and 
 quite probable had the United States definitely and unre- 
 servedly ceased their efforts to do something for silver. The 
 attitude of expectancy still continued, and for two years the 
 price of silver held fairly steady at about 52 pence. 
 
 The proper position for the United States to take in behalf 
 of bimetallism was appreciated by the administration at Wash- 
 ington, but was scorned by the radical silver advocates. No 
 doctrine ever stood in such dire need of being delivered from its
 
 THE CONFERENCE FAILS TO REASSEMBLE 325 
 
 most officious friends. Supplementing a statement concern- 
 ing the continued difficulties of circulating the new silver 
 dollars, Secretary Folger said in his report for December, 
 1881: 
 
 " The silver question Is involved in some embarrassments. The 
 monetary conference to which a commission was sent the past year, 
 after elaborate discussion, reached no conclusion, except to adjourn 
 to meet again for a further discussion next April. Whether a re- 
 newal at the present time of the consideration of the subject by it 
 is likely to lead to any practical or acceptable results seems doubt- 
 ful. That most of the European nations have a deep interest in 
 a proper adjustment of the ratio between gold and silver coinage, 
 if not deeper than the United States, admits of no doubt. We 
 furnish the world with the largest portion of both gold and silver, 
 and our exports command the best money of the world, as they ever 
 should do and will, unless we bind ourselves to accept of a poorer. 
 We neea not appear anywhere as supplicants when we clearly may 
 be the controllers The most potential means of bring- 
 ing about any concert of action among different nations would ap- 
 pear to be for the United States to suspend for the present the further 
 coinage of silver dollars. This is the decided opinion in both France 
 and America of the highest authorities on bimetallism and of those 
 who wish to bring silver into general use and raise its value ; and 
 it is believed that a cessation of coinage would at a very early 
 day bring about a satisfactory consideration of the whole subject 
 among the chief commercial nations." 
 
 This was also the opinion of the American delegates to the 
 conference, who saw reasons for thinking that England's em- 
 barrassments would continue and multiply till the govern- 
 ment yielded. The bimetallists in Congress should have had 
 foresight enough to have adopted the suggestion at once, or 
 before the time for the reassembling of the conference. But, 
 instead, it allowed the silver dollars to accumulate and relieve 
 the embarrassments of the European nations, and, owing to 
 a persistent clamor from the South, there was a movement 
 for the reduction of the tariff something which Europe 
 always awaited hopefully. AVhen the time for reassembling 
 came it was found that England and Germany adhered to 
 their positions, and France and the United States were quite 
 as unwilling as ever to accept their terms. So the time passed 
 without anything being undertaken. 
 
 While the United States continued to pile up silver dol-
 
 326 THE STRUGGLE FOR GOLD 
 
 lars in the vaults of the treasury, the European governments 
 took rational steps to protect themselves. In September, 1882, 
 the Dutch delegates strongly recommended to their govern- 
 ment the conversion into bullion and the sale of a part of the 
 silver coin held by the Bank of Holland, and the purchase of 
 gold ingots with the proceeds. The stock of gold in the bank, 
 which at the close of the year 1880 was about 57,000,000 
 florins, had fallen to nearly 11,000,000, while the stock of 
 silver had varied between 91 and 94 millions of florins. The 
 gold depletion was, in part, due to the unusual efforts of the 
 Banks of England, France, and Germany to accumulate gold, 
 which began as soon as it became apparent that no settlement 
 for a larger use of silver was probable. The Dutch delegates, 
 looking to the interests of the country in its commercial rela- 
 tions with neighboring states in which gold was the standard, 
 and to the necessity of maintaining a normal rate of exchange, 
 urged that a stock of gold must always be kept on hand, as, 
 whenever the bank should become unable to place gold bullion 
 at the disposal of the exporter, gold coins would command 
 a premium, with the necessary result that the standard silver 
 coins would become depreciated and the rate of exchange 
 with London would rise to an abnormal height. Some objec- 
 tion was made to the plan because the sale of silver and the 
 purchase of gold could not be effected except at a loss of about 
 15 per cent, to the state, but in February, 1883, a bill was in- 
 troduced by the government into the second chamber of the 
 States-General, authorizing the Minister of Finance to cause 
 2^-florin pieces of the nominal value of 25 millions of florins 
 to be melted and sold. In order to meet the loss entailed by 
 this operation, another bill was at the same time presented, fix- 
 ing at 15 instead of 10 millions of florins the amount of gov- 
 ernment paper money, thus increasing by 5 millions the debt 
 bearing no interest. A long controversy followed, and in the 
 meantime the situation of the bank greatly improved, so that,
 
 TONS OF SILVER DOLLARS 827 
 
 when the measure finally passed, the government did not con- 
 sider it necessary to avail itself of its provisions, though it re- 
 mained on the statute-books conveniently ready for such an 
 emergency. The government took a more cautious and less 
 expensive course, by melting a sufficient number of the 2-J- 
 florin pieces, whenever silver was needed for subsidiary pur- 
 poses, instead of purchasing ingots in the London market as 
 theretofore. In this way quite a large amount of the silver 
 in the bank was worked into the home and colonial circula- 
 tion as limited tender. 
 
 In striking contrast to this were 'the efforts of our Con- 
 gress to force silver into the circulation. The New York 
 Clearing-House had persistently discriminated against the sil- 
 ver dollars and their certificates, and in July, 1882, Congress 
 passed an act prohibiting banking associations from being 
 members of any clearing-house in which silver certificates 
 were not receivable for balances. The associated banks passed 
 resolutions nominally complying with the act, but the prac- 
 tice was such that the Treasury was unable to use either the 
 silver dollars or certificates in settlements at the Clearing- 
 House. This operated against the accumulation of gold in the 
 Treasury, and resulted in a constant increase in the accumula- 
 tions of silver. The Secretary of the Treasury remarked in 
 his report that year, that if the coinage of silver dollars was 
 kept up, and the demand for them continued as dormant as 
 it had been up to that time, it would become a serious question 
 where to find storage room for them in the public receptacles. 
 In all, there were then 2400 tons of the metal stored in the 
 public vaults. 
 
 The remarkable excess of imports of gold over exports 
 ceased, also, at about this time. Whereas the excess of imports 
 over exports was $77,000,000 in 1880, and $97,000,000 in 
 1881, in 1882 it was only $1,800,000, and in 1883 only 
 $0,000,000. This was largely due to diminished exports of
 
 328 THE STRUGGLE FOR GOLD 
 
 grain, European harvests having improved in the two latter 
 years; but the restrictions which the large banks of Europe put 
 in the way of gold for export had much to do with it, for it 
 operated against our export trade in the products of our manu- 
 factories. At the same time the European governments were 
 taking every possible step to increase their export trade, and 
 some of them to decrease their imports. Germany imposed a 
 high tariff on articles that came into competition with her 
 own products or were not essential to the subsistence of her 
 people. In 1881 the balance of our trade with Germany was 
 $17,000,000 in our favor, in 1882 it was $2,000,000 in Ger- 
 many's favor. 1 
 
 The cessation of the excess of gold imports, however, was 
 not then a serious matter to the United States, which had a 
 large stock of gold, and produced it to the value of over $30,- 
 000,000 yearly. There was nothing to be concerned about so 
 long as our own product remained here. Xo nation ever had 
 
 i " While the exportations to the United States were so large 
 and gratifying to the people of Germany, the importations from 
 the United States showed a decrease, and it would seem that in al- 
 most that proportion in which the exportations to the United States 
 increased, the importations from our republic decreased. Yes. even 
 to a greater degree, for although during the fiscal year 1881-82 the 
 exportations from Germany to the United States amounted in value 
 to about $12,000,000 more than in 1880-81, importations from the 
 United States were about $10,000,000 less. The policy of the govern- 
 ment of this empire in placing high duties upon articles grown or 
 produced in foreign countries has had the effect, in my judgment, 
 to seriously impair our commercial prospects in this direction. . . . 
 Borne down by military burdens and the legacy of the past, Europe 
 looks across the watery waste and sighs for resources like ours 
 for such a destiny. The great question is not how the great Amer- 
 ican Republic shall dispose of its surplus products, but how shall 
 Europe find in America and the world at large markets for its 
 wares, that its multitudes may obtain bread to eat and be withheld 
 from revolution. They need from us these staples of life, but how, 
 in return for these staples, shall they requite us?" Report of .Tas. 
 Henry Smith, Commercial Agent at Hesse-Darmstadt, Sept. 1, 1883. 
 
 In a speech in the Reichstag. May 12, 1882, Bismarck said: 
 " Because it is my deliberate judgment that the prosperity of 
 America is mainly 'due to its system of protective laws, I urge that 
 Germany has now reached that point where it is necessary to imitate 
 the tariff system of the United States."
 
 WARNINGS FROM THE TREASURY 329 
 
 an equal opportunity to commercially control the money of 
 the world ; no nation ever so wasted its opportunities as did the 
 United States then. Our currency policy would have ruined 
 any country in Europe in short order, and it was not long 
 before our great resources began to show its effects. A change 
 was manifest soon after the slight tariff reduction of 1883, and 
 yet for a whole decade nothing stood between us and a crisis 
 except this tariff. When, finally, it was decided to throw 
 that down, the crisis was at hand. Regularly every year a 
 warning came from the Secretary of the Treasury. Hugh 
 McCulloch, who again became the head of the department for 
 a brief period under President Arthur, said in his report, in 
 December, 1884, that it was becoming more and more evident 
 that silver certificates were taking the place of gold, and that 
 a panic or an adverse current of exchange might compel the 
 use in ordinary payments by the Treasury of the gold held for 
 the redemption of the United States notes, or the use of silver 
 or silver certificates in the payment of its gold obligations. 
 " The United States," he said, " is one of the most powerful 
 of nations its credit is high, its resources limitless; but it 
 cannot prevent a depreciation of silver unless its efforts are 
 
 aided by leading nations in Europe The European 
 
 nations which hold large amounts of silver must sooner or later 
 come to its rescue, and the suspension of coinage in the United 
 States would do much to bring about on their part action in 
 its favor. But whatever might be the effect of the suspension 
 of the coinage upon the commercial value of silver, it is very 
 clear that the coinage cannot be continued without detriment 
 to general business and danger to the national credit." But 
 Congress, observing the unquestioning faith with which the 
 people took the silver certificates at the gold value, considered 
 the warnings idle and remained oblivious to the dangers un- 
 derneath the surface of things. Bad financial tendencies sel- 
 dom manifest themselves clearly when confidence is com-
 
 330 THE STRUGGLE FOR GOLD 
 
 plete ; the condition of affairs may seem to warrant the greatest 
 satisfaction and yet be on the point of disaster, precipitated, 
 perhaps, by a trifle. 
 
 The depression of trade continued in England, and the 
 number of those who attributed it to the scarcity of gold and 
 the fall in prices increased after the adjournment of the con- 
 ference. None did so much to awaken British sentiment as 
 the two men who had been delegates to the conference of 
 1878. Goschen, who had the reputation of being one of the 
 best-informed men in England on financial matters, was es- 
 pecially influential in arousing the commercial and industrial 
 centres of the kingdom. Adressing the Bankers' Institute of 
 London, on April 18, 1883, he called attention to the fact that 
 the demand for gold which had within a short period been 
 made by Italy, in an effort to resume specie payments, by Ger- 
 many in its monetary reform, and by the United States in 
 trade amounted to 200,000,000 a demand which had ab- 
 sorbed a sum equal to ten years' supply of that metal. 1 At 
 the same time the matter was the subject of occasional debate 
 in Parliament, and the threatened diminution of the reserves 
 of the bank caused considerable alarm. That institution, how- 
 
 i " I next have to ask from what annual supply of gold this ex- 
 traordinary demand had to be met? Now, many of you may be 
 aware that there has been a falling off in the annual supply of gold, 
 and that while in 1852 the first year after the gold discoveries 
 the amount of gold produced was 30,000,000, it is now about 20,- 
 000,000 per annum. I think it may be well to give these facts in a 
 quinquennial statement. The total production from 18.">2 to 1856 
 in those five years was, in round numbers, 150,000,000, giving an 
 annual average of 30,000,000. In the next quinquennial period, from 
 1857 to 1861, the total production was 123,000,000, giving an annual 
 average of 24,600,000. Between 1862 and 1866 the total amount 
 produced was 114,000,000, and the annual average 22,800,000; and 
 in the years between 1867 and 1871 the total production was about 
 109,000,000, with an annual average of 21,753,000; and in the years 
 between 1871 and 1875 the total production was 77,000,000, and the 
 annual average 15,400,000. Thus, you will observe that we have 
 had an extraordinary and additional demand of 200,000,000 sterling 
 coming upon an annual supply of 20,000,000 sterling." Goschen, 
 before Bankers' Institute.
 
 A SEASON OP PROSPERITY IN INDIA 831 
 
 ever, by persistent efforts in the face of difficulties, managed 
 to maintain a fair reserve, the task becoming somewhat easier 
 on account of the cessation of German purchases and the 
 more abundant crops on the continent as well as in Great 
 Britain and Ireland. 
 
 Little complaint came from the Indian colony during the 
 early eighties. The alarm for the future, which manifested 
 itself in 1876, seems to have been calmed by a remarkable 
 expansion of the export trade of India. In spite of the fall 
 of silver in relation to gold, the rupee would purchase as much 
 of other commodities in India as ever, a fact which not only 
 gave the wheat growers of the Punjab a great advantage, but 
 had a stimulating effect upon other industries. During the five 
 years 1877-81 the average annual export of wheat from India 
 was 5,000,000 cwts., and during the five years 1882-86 it was 
 19,000,000 cwts. In 1874, before the fall of silver had begun 
 to seriously manifest itself, the total exports of yarn from the 
 Indian mills to China and Japan amounted to only 1,000,000 
 pounds. In 1875, when silver had fallen 3c7. per ounce, the 
 1,000,000 pounds, which it had taken India nearly ten years to 
 reach, suddenly expanded to 5,000,000 pounds. By 1880 it 
 was 25,000,000 pounds, and by 1885 it was 75,000,000 
 pounds, which was nearly three times more yarn than the 
 United Kingdom was sending to Japan and China, and almost 
 as much as it was sending to China, Japan, and India to- 
 gether. The increasing loss on remittances to England on 
 account of fixed charges naturally occasioned little complaint 
 from the Indian government, whose ability to discharge these 
 obligations was increasing somewhat faster than the gold 
 value of the rupee fell. 1 Shrewd Indian merchants began to 
 
 'It was not until the fiscal year 188G-87 that the increase in home 
 charges due to a declining rate of exchange began to absorb India's 
 favorable balance of trade. That year the rate dropped to 17.4 
 pence per rupee and the year following to 16.8 pence.
 
 332 THE STRUGGLE FOR GOLD 
 
 regard the silver standard as advantageous, but, of course, the 
 functionaries, who were paid in rupees, which on being re- 
 mitted to England through the medium of exchange were 
 measured at their gold value, regarded it in a far different 
 light. So did the Lancashire manufacturers, whose business 
 was becoming more and more depressed, and who began to ob- 
 serve the remarkable development of Indian competition in 
 the great Oriental markets. Nothing is so painful to a British 
 manufacturer as the sight of colonies, which he considers it his 
 vested right to supply with goods, not only filling their own 
 markets but actually usurping the trade in other countries. 
 " Everything for England and nothing for India " was the 
 motto which was popularly supposed to give a general descrip- 
 tion of the commercial relations of the mother country to the 
 great Asiatic possessions. They were intended for the enrich- 
 ment of England. Unfortunately, matters were not working in 
 that agreeable manner at that time. But while Lancashire had 
 reasons for bitter complaint, the unsatisfactory conditions of 
 trade were by no means confined to its industries. Business, 
 which had been languishing for ten years, seemed to fall flat in 
 1885, and the complaints were so numerous and came from 
 such influential sources that the government responded by ap- 
 pointing a royal commission to investigate. The revenues from 
 the railroads in England were 1,000,000 less in that year 
 than'in 1884. The returns of the London Clearing-IIouse fell 
 off 5 per cent. The production of pig-iron dropped from 
 7,530,000 tons to 7,250,000. The number of bankruptcies 
 increased from 4394 to 5089. The reports of the United 
 States consuls in Great Britain for that year furnish similar 
 statistics for nearly every line of business. The value of the 
 exports fell off largely, but it was due to a shrinkage of values 
 rather than of quantities, and, while the financial centres were 
 anxious to avoid the appearance of suspecting that the shrink- 
 age was the work of an appreciating gold basis, the manufact-
 
 EUROPEAN STATES ADOPT THE PROTECTIVE POLICY 333 
 
 uring centres openly accused the sanctified standard of Eng- 
 lish money as the cause of it all. 1 
 
 The opinion was also held by a small group that England's 
 free-trade policy was responsible for it. There can be little 
 doubt that the tariff policy of the Continental nations, adopted 
 largely after the failure of the conference of 1881, greatly dis- 
 turbed the old commercial conditions, with disadvantage to 
 England. But these tariff changes were indirectly, if not 
 directly, due to the scarcity of gold, manifesting itself in the 
 reserves of the banks. We have already referred to the adop- 
 tion of a high tariff in Germany, one of the reasons for which, 
 as openly declared, was the necessity of forcing a favorable 
 balance of trade. France followed by transforming its ad 
 valorem duties into those collected by weight, the effect being 
 to considerably raise rates. Austria adopted the protective 
 policy in 1882, and Switzerland in 1885. At the same time 
 these countries sought in every way possible to expand their 
 markets abroad, and especially in the United States, where re- 
 duction of the tariff in 1883 was, under the circumstances, in- 
 opportune. Our heavy exportations they considered a stand- 
 ing menace to their gold reserves, the chief remedy for which 
 was an increased sale of their more cheaply produced products 
 in America. 
 
 A strong effort was made in Germany to inaugurate a 
 
 i " The result has been a long, slow, grinding adaptation to the 
 new conditions, pressing unequally upon nations and upon individ- 
 uals, and intensely aggravating a depression which in all probability 
 would have occurred without concurrent restriction of circulation by 
 various nations, but which would have been in all probability by no 
 means so severe. This subsidence of values has affected Great 
 Britain quite as it has other nations, and being so heavily a creditor 
 of the world and the richest of European nations, she has felt the 
 depression at last, and thus while Continental countries have been 
 driven to desperate exertions to improve and cheapen their manu- 
 factures and to find new and to enlarge old markets. Great Britain 
 has been asleep; and now when the pressure is upon her as badly 
 as upon others she wakes up to find Germans, French, and Belgians 
 actively disputing markets which she thought hers by prescription." 
 Consular Report from Bristol, Eng., Jan. 7, 1887.
 
 334 THE STRUGGLE FOR GOLD 
 
 policy of buying less from us by forming a " Central Euro- 
 pean Zollverein." The aim was to first enter into a commer- 
 cial treaty with Austria-Hungary, both countries embracing 
 a population of 82,000,000 and producing articles which 
 mutually supplemented deficiencies. Germany, for instance, 
 would buy its needed breadstuffs in Austria-Hungary instead 
 of America and India, and Austria-Hungary would buy coal 
 in Germany, instead of in England. A German paper, which 
 was supposed to reflect the opinions of the government, said : 
 " Such an economical union once established between the two 
 countries mentioned would be successively joined by smaller 
 states of Europe, which, like Switzerland, Belgium, and Hol- 
 land, are particularly confined to exportation. But even 
 Erance, and with it Italy and Denmark, would, in joining that 
 union, find their account in the fight against economical com- 
 monwealths that, like the United States, Russia, China, and 
 Great Britain, embrace whole continents." The action of Ger- 
 many, inspired by motives of this kind, largely accounts for the 
 fact that the exports of both England and the United States 
 showed such a decline during this period with Continental 
 countries in which the scarcity of gold suggested and pro- 
 duced the protective policy. It was the dominating considera- 
 tion behind the peculiar crusade against American meat prod- 
 ucts which occasioned so much diplomatic correspondence 
 at that time. Had Germany been certain of an abundant sup- 
 ply of gold there would have been less trichinosis in our pork. 
 
 The year 1885 was a critical one for the Latin Union. 
 Switzerland had given notice of a desire to terminate it. 
 Erance had become weary of the mass of silver belonging to 
 other states in the convention and was resolved, whether the 
 union were dissolved or not, to insist upon a definite plan for 
 the redemption by the different states of their respective shares. 
 
 The Bank of France, while possessing a large stock of gold, 
 had up to this time found silver taking a larger and larger
 
 DISAGREEMENTS IN THE LATIN UNION 335 
 
 place in its reserves, and, with a demand for gold pressing from 
 all sides, the government was determined to do something to 
 relieve the situation. So, when the conference for the purpose 
 of considering the renewal of the treaty was called, it asked 
 that the renewal be made subordinate to an engagement to be 
 assumed by each country to guarantee the value of their 5- 
 franc coins and pledging to refund their value in gold at the 
 time of the dissolution of the union. Belgium vigorously op- 
 posed it, maintaining that on the dissolution of the union any 
 loss should be charged to the associated states. France insisted, 
 but Belgium would concede nothing, except that no obstacle 
 would be placed in the way of the natural return of her silver 
 coins. Finally, her delegates refused to subscribe to the treaty, 
 and left the conference, which closed its sittings August 4, to 
 reconvene October 1. Belgium realized, however, that the dis- 
 solution of the union at that time would be highly disadvan- 
 tageous to its finances under any circumstances, and its dele- 
 gates returned to make the best terms they could. They finally 
 agreed that Belgium should, in the event of the future disso- 
 lution of the union, redeem one-half of her silver, provided 
 France would agree that the remainder should not be re- 
 patriated, except in the course of natural trade. Belgium 
 would further agree not to modify her monetary system for 
 five years after such a dissolution. On this basis a new treaty 
 was finally made, one of the clauses being that any country 
 which should thereafter issue silver coins of full legal tender 
 should always stand ready to redeem them. 
 
 The Congress at Washington continued to disregard the 
 advice of the Treasury Department regarding silver coinage, 
 though an attempt was made late in the Forty-eighth Congress 
 to follow it by attaching to the sundry civil bill, then pending 
 in the House, a provision to suspend the operation of the 
 Bland-Allison Act. It was rejected by a vote of 118 to 152. 
 The campaign of 1884 had not been fought on financial
 
 336 THE STRUGGLE FOR GOLD 
 
 grounds; both parties demanded the use of both gold and silver 
 as legal money under proper restrictions for the maintenance 
 of their parity. But a large section of the Democratic party 
 earnestly favored a free-coinage policy for the United States, 
 irrespective of the intentions of other states, and it was an un- 
 pleasant surprise to this faction when President-elect Cleve- 
 land began early in 1885 to express his opposition to silver 
 coinage in letters to members of Congress. In the expecta- 
 tion that he would take a position hostile to silver in his in- 
 augural, ninety-five Democrats in the House addressed to him 
 a communication requesting that he should not commit his 
 party to such a position till all phases of the question had been 
 fully considered. He replied in a very direct and forcible 
 manner, on February 24, asserting his opinion that a financial 
 crisis would speedily follow if the coinage of silver were con- 
 tinued; that the gold in the Treasury reserved for the re- 
 demption of the greenbacks, if not already encroached upon, 
 was perilously near encroachment : and he ended by expressing 
 the wish that they would concur with him in seeking to deliver 
 the people from the impending calamity, which might at any 
 time be precipitated. The silver men replied in a long argu- 
 ment for their metal. They pointed out that France, with a 
 population of 36,000,000 and a territory not as large as Texas, 
 had in circulation $600,000,000 of silver with $850,000,000 
 of gold while the United States had but $200,000,000 of full 
 legal-tender silver to over $600,000,000 of gold. With this 
 proportion in our currency, they said, and with gold and silver 
 equally full legal tender for everything, it was difficult to un- 
 derstand why the Secretary of the Treasury might not, if lie 
 chose to do so, pay out more silver and less gold. They could 
 easily see that, while receiving into the Treasury United States 
 notes, silver, silver certificates, gold, and gold certificates, if he 
 paid out only gold, his stock of gold would diminish, but, if in- 
 stead, he paid out more silver, how, they asked, could the
 
 SPECIOUS ARGUMENTS OF SILVER MEN 337 
 
 character of the reserve change? In regard to the predictions 
 of the different Secretaries of the Treasury, to which the 
 President-elect had referred, they reminded him that expe- 
 rience had proved them to have been baseless, that gold had 
 continued to accumulate in the country since the coinage of sil- 
 ver was begun, that it never possessed so much gold as then, 
 and that $80,000,000 of the gold in the Treasury had been put 
 there in exchange for silver certificates. 
 
 If the warnings of the Treasury Department had been 
 somewhat overdrawn, the argument of the silver men was 
 specious. Gold could not have failed to accumulate in this 
 country under the commercial conditions that had prevailed 
 since 1878, with Europe clamoring for our breadstuffs; it could 
 not fail to accumulate in the Treasury in the process of ex- 
 change for silver certificates when currency was in active de- 
 mand to meet extraordinary business requirements ; and, while 
 they cited the example of France in keeping a vast amount of 
 silver in circulation, they ignored the fact that France had 
 coined no legal-tender silver for seven years, and that the Bank 
 of France, which had the option of paying in either gold or 
 silver, could not prevent the overloading of its reserves with 
 silver and the consequent danger to its notes. France, more- 
 over, was a creditor nation, while the United States were regu- 
 larly compelled to pay fully $100,000,000 in annual interest 
 or earnings on various securities or investments held abroad. 
 Only by maintaining a favorable balance to that amount in our 
 foreign trade could we keep our gold, for Europe took very 
 little of our silver, except that which w r as intended for India. 
 
 At the very end of the session, March 3, the Senate passed 
 a resolution requesting the executive to resume negotiations 
 with the powers in the interests of a bimetallic agreement, 
 but it was too late to secure action in the House. The step ap- 
 pears to have been suggested by those close to the President- 
 elect. While on assuming office he adhered to his policy for 
 22
 
 338 THE STRUGGLE FOR GOLD 
 
 the suspension of silver coinage, and, so far as he could, com- 
 mitted influential members to it, he at once undertook to sound 
 the European powers in relation to international action. The 
 probability that when the Forty-ninth Congress met in De- 
 cember another free-silver crusade would be begun may have 
 had some influence in his determination upon this course ; but, 
 on the other hand, the facts seem to warrant the conclusion that 
 his administration would have gladly approved of the free 
 coinage of silver with the co-operation of the other large states. 
 
 The consul-general at Paris was instructed to present to 
 the delegates to the conference of the Latin Union an expres- 
 sion of the interest in its objects felt by this country, and to 
 sound them on the practicability of reopening negotiations 
 under the plan suggested by the conference of 1881. Early 
 in May, also, Manton Marble, of New York, was appointed a 
 special commissioner " to proceed to Europe and by personal 
 conference with the expert advisers and statesmen of the prin- 
 cipal governments to ascertain the present opinions and pur- 
 poses of those governments in respect to such an establishment, 
 internationally, of a fixed relative value between the two 
 metals," and to the international use of both metals as legal 
 tender. 
 
 The Ministers to France, Germany, and England, were 
 asked to act in conjunction with Marble, affording him any 
 assistance possible, and to report their own observations and 
 conclusions. Consul-General Walker, at Paris, was permitted 
 to present a statement of the position of the United States to 
 the conference of the Latin Union, but any interest in the sub- 
 ject of renewed negotiations with a view to an international 
 agreement was eclipsed by the critical condition of the mat- 
 ter immediately before the conference, and in August Walker 
 reported to the State Department concerning the inharmonious 
 character of the debate up to the time of the adjournment to 
 October, and of his efforts to secure a consideration of the
 
 REPORTS OF AMERICAN MINISTERS 339 
 
 matters of particular interest to the government. His con- 
 clusion of the whole matter was that " nothing would so hasten 
 the adoption of the bimetallic theory in Europe as the sus- 
 pension of silver coinage in the United States." This was 
 no sinister opinion. At about the same time Goschen de- 
 clared to the Manchester Chamber of Commerce that there 
 was no hope of the improvement of the financial situation 
 until it was known what the United States would do with the 
 Bland Bill. 
 
 During October the Ministers made their reports, and they 
 generally agreed. The Minister at London, E. J. Phelps, said 
 that, acting with Marble, he had secured free and protracted 
 conferences with the government, and Marble had also been in 
 confidential communication with those members having official 
 relations to the subject. These interviews had been full and 
 exhaustive, the whole ground had been gone over, and he said 
 the British officials had expressed their opinions frankly, and 
 the information could be depended upon as representing the 
 attitude then occupied, and likely to be maintained, by the 
 British government. " From these and other sources," said the 
 Minister, " I am satisfied that the British government will in- 
 flexibly adhere to their past and present policy in respect to 
 coinage, that they will not depart from the gold standard nor 
 become a party to any bimetallic union to make silver a legal 
 tender in Great Britain." The Minister at Paris said : "While 
 France would gladly receive the intelligence that the United 
 States would adopt the French ratio of 15.50 of silver to 1 of 
 gold, no consideration of future consequences, whether for 
 good or evil, could induce her to adopt the American ratio of 
 16 to 1 still less would she adopt any higher ratio to as- 
 similate the present commercial or market value of silver with 
 the value of gold, nor would she consent to any ratio now to 
 permit an unrestricted or even a limited coinage at her mints." 
 
 This seemed to indicate that the position of France had be-
 
 340 THE STEUGGLE FOR GOLD 
 
 come less favorable, but it was only so because of domestic con- 
 siderations. France was still favorable to a general bimetallic 
 agreement on her ratio, but she would not have consented to 
 a modification of her ratio, and there had not been a time 
 since the bimetallic agitation began when she would have done 
 so, though this country had persistently overlooked the fact. 
 After the failure of the conference of 1881, France threw 
 away theoretical considerations largely, and regarded silver 
 coinage from a purely domestic basis. She had just taken steps 
 to make a very complete count of the relative proportion of 
 silver and gold in circulation, and it appeared that the silver 
 had increased enormously. There were a billion francs of 
 foreign silver in the Republic, that is, coins of other states of 
 the Latin Union; of these 465,000,000 francs belonged to Bel- 
 gium, and 435,000,000 to Italy. If the countries should refuse 
 to redeem these coins France would incur a loss of at least 
 600,000,000 francs. It is, therefore, easy to understand the 
 attitude of self-defence that France took, and why the debates 
 in the conference of the Latin Union were so prolonged and 
 so inharmonious. 
 
 The Minister at Berlin reported that, while the bimetallic 
 sentiment had been making great headway in Germany, the 
 government would consider an agreement impracticable unless 
 England and Russia joined it, and it was frankly declared that 
 the adherence of England was for Germany a sine qua non. 
 A long debate had arisen in the Reichstag, and bimetallism 
 was strongly advocated, but that body refused to amend the 
 laws of 1871 and 1873, and a motion to instruct the govern- 
 ment to open negotiations with other powers was defeated, 
 though, it was said, for political reasons mainly. 
 
 With this information from abroad, the President met 
 Congress when it assembled in December, with a strong ap- 
 peal for the suspension of silver coinage. He maintained that 
 the most vital part of the act of 1878 remained inoperative,
 
 THE INDIAN GOVERNMENT BECOMES ALARMED 841 
 
 because the conference for international action had failed, and 
 that without an ally and friend we battled upon the silver 
 field in an illogical and losing contest. The report of Secretary 
 Manning was a vigorous and elaborate review of the monetary 
 history of the government, a statement of existing conditions, 
 and a demonstration from his point of view of the urgency 
 of the repeal of the silver act. " In but one way now," he said, 
 " can any nation retain in use coins of both metals which are 
 both unlimited legal tender; namely, by stopping the coinage 
 of the metal unacceptable to other nations. France has done 
 so. The United States must likewise stop coining silver. Stop, 
 wait, negotiate." 
 
 But not long after this steps were taken in England which, 
 to the administration at least, seemed encouraging indications 
 of a change in the opinion of the English government. In 
 January, 1886, while the Select Committee on the Depres- 
 sion of Trade were still pursuing their investigations, a 
 correspondence, apparently of considerable significance, was 
 opened between the Indian Office of the home government and 
 the Treasury. The first letter from the Secretary of State 
 for India closed with these words: " Lord Randolph Churchill 
 desires at the same time most earnestly to press upon my 
 Lords the importance of making every endeavor that is possi- 
 ble to bring about by international agreement some settle- 
 ment of the question how the free coinage of silver may be 
 revived, and the comparative stability of the relative value 
 of gold and silver, which is so essential for the regular course 
 of trade, and which is of such vital importance to India, may 
 be secured." This urgent appeal was supported by a tele- 
 gram from the government of India saying : " We are of 
 opinion that the interests of British India imperatively de- 
 mand that a determined effort should be made to settle the sil- 
 ver question by international agreement. Until this is done 
 we are drifting into a position of the most serious financial em-
 
 342 THE STRUGGLE FOR GOLD 
 
 barrassment, in regard to the consequences of which, not only 
 as regards our financial position, but in respect of measures of 
 taxation in relation to our rule of British India, it is irnpossi* 
 ble not to be seriously apprehensive." 
 
 Just at this important moment Congress embraced the 
 opportunity to introduce and discuss another bill for the free 
 coinage of silver. It was reported adversely by the Coinage 
 Committee, and, when it came up in the House, a substitute 
 was offered providing that unless prior to July 1, 1889, silver 
 was remonetized " through the concurrent action of the nations 
 of Europe with the United States," coinage under the act of 
 1878 should be discontinued. This proposition, which, had it 
 been adopted, would in all probability have had a marked 
 effect on the attitude of the English government at that time, 
 was rejected on April 8, 1886, by a vote of only 84 yeas to 
 201 nays. 
 
 The reply of the English Treasury Department to the letter 
 of the Secretary of State for India was made in May, the gov- 
 ernment, meanwhile, having changed hands, so that the opin- 
 ion delivered was that of Gladstone's ministry. It was to the 
 effect that it could take no measures for summoning or co- 
 operating in a new monetary conference until it had previously 
 determined what policy it should initiate or consent to. The 
 whole subject, the government understood, was under consid- 
 eration of the Commissioners on the Depression of Trade, 
 but the Treasury said it could find nothing in the correspond- 
 ence and information before them to induce it to depart from 
 the instructions given to the British representatives in 1881. 
 
 This commission had taken a large amount of testimony 
 and secured all available statistics. Some difference of opinion 
 was manifest among its members as to the causes of the depres- 
 sion, but as to its nature they agreed in the definite conclusion 
 that it dated from 1873 or thereabouts, that it extended to 
 every branch of industry, and was not confined to England,
 
 STEPS IN ENGLAND FOK AN INTERNATIONAL AGREEMENT 343 
 
 that it appeared to be closely connected with a serious fall of 
 prices resulting in the diminution and in some cases the total 
 loss of profits and consequent irregularity of employment to 
 the wage-earner, that its duration had been most unusual and 
 abnormal, and that no adequate cause was discoverable unless 
 it could be found in some general dislocation of values, caused 
 by currency changes capable of affecting an area equal to that 
 which the depression covered. The third report of the com- 
 mission, which was presented soon after the Treasury had 
 replied to the Indian Secretary that it could discover in the 
 evidence no reason for a change in the attitude of the govern- 
 ment, entered into the causes of the change in the conditions 
 of gold and silver, and ended by recommending that, on ac- 
 count of the importance and nature of the subject, another 
 commission be appointed to investigate " the recent changes in 
 the relative values of the precious metals." 
 
 It so happened that by the return of the Tory party to 
 power in the elections of July, precipitated by the defeat of 
 one of Gladstone's Irish bills in Parliament, this recommenda- 
 tion fell into the hands of those who had made it. Meanwhile 
 several petitions for the appointment of such a commission 
 were prepared, one signed by 24*3 members of the House of 
 Commons, and requesting an inquiry as to " remedies within 
 the power of the legislature or the government by itself, or in 
 concert with other powers, which would be effectual in remov- 
 ing or palliating the evils or inconveniences without injustice 
 to other interests and without causing other evils and incon- 
 veniences equally great." In the Tory cabinet there was a 
 new distribution of offices. The First Lord of the Treasury, 
 Iddesleigh, and the Chancellor of the Exchequer, Hicks- 
 Beach, who had successively held the leadership of the 
 House of Commons, were translated to other functions. 
 There may have been no significance in this, so far as 
 the monetary question was concerned, but it was a fact,
 
 344 THE STRUGGLE FOR GOLD 
 
 nevertheless, that Iddesleigh, whose opinions Gladstone's gov- 
 ernment had cited in May in support of the maintenance of 
 England's traditional policy in its reply to Churchill, was not 
 placed in the Treasury, and Churchill, who, as Secretary of 
 State for India, had in January urged every endeavor for an 
 international agreement for the free coinage of silver, was made 
 Chancellor of the Exchequer, and took the leadership of the 
 House of Commons. In that capacity, September 7, Churchill 
 announced as members of the Gold and Silver Commission, 
 Lord Herschell, chairman; Sir Charles Fremantle, Sir John 
 Lubbock, T. H. Farrar, J. W. Birch, Leonard "W. Court- 
 ney, Sir Louis Mallet, Arthur Balfour, Sir David Barbour, 
 Sir William Houldsworth, Sir Samuel Montagu, and Henry 
 Chaplin. 
 
 Not calculated to diminish the uneasiness of European 
 financial circles at this time were the facts that Italy was ab- 
 sorbing considerable gold by its loans for resumption purposes, 
 that Russia began to retain a larger portion of its gold product 
 as a result of its new monetary law, which went into effect 
 January 1, 1886, and which provided for the free coinage of 
 gold, while coinage of silver on private account was prohibited, 
 though the monetary unit was the silver rouble, and the mer- 
 cantile crisis which was afflicting Netherlands India, and which 
 was attributed by the Java authorities to the workings of the 
 gold standard. The whole influence of the Indian government 
 was exerted in favor of concerted action. In a dispatch sent to 
 the Treasury upon the appointment of the Royal Commission 
 it said : " In no other way than that of international agree- 
 ment can a lasting and satisfactory order be brought about, and 
 we trust that Your Majesty's government will give up its posi- 
 tion of absolute isolation a position which we venture to be- 
 lieve is indefensible in theory and in practice is fraught with 
 danger both for England and for India;" and in conclusion, 
 " "We do not hesitate, therefore, to repeat emphatically that,
 
 SECRETARY MANNING'S HOPES OF AN AGREEMENT 345 
 
 from the standpoint of Indian finances, the situation has be- 
 come intolerable." 
 
 The stubborn attitude of President Cleveland towards sil- 
 ver coinage had a quieting effect upon the silver element in 
 the party, and during his first administration there was com- 
 paratively little agitation, the fear of offending the executive 
 who had so much patronage to bestow overbalancing any de- 
 votion they had to silver principles. Some criticisms of the 
 President were uttered in Congress, notably by Senator Beck ; 
 but, as Senator Edmunds said, " the Democratic party was wise 
 enough for a wonder wise enough for a wonder - to be ab- 
 solutely silent upon that topic." But any effort to secure the 
 repeal of the silver-coinage act was quickly strangled. In his 
 report of December, 188G, Secretary Manning said that " if 
 the law were repealed which makes compulsory Treasury pur- 
 chases of silver, and if that repeal were accompanied by the 
 declaration of Congress that the United States " would hold 
 itself in readiness to unite with France, Germany, and Great 
 Britain in opening their mints to the free coinage of silver 
 and gold at a ratio fixed by international agreement, it was his 
 deliberate judgment " that before the expiration of another 
 fiscal year this international monetary dislocation might be 
 corrected by such an international concurrence, the two metals 
 restored to their old and universal function as the one standard 
 measure of prices for the world's commodities, the depression 
 of trade and industry relieved, and a general prosperity re- 
 newed." But the picture had no effect. It was feared by both 
 parties that a stoppage of coinage would be interpreted by the 
 people, who were not supposed to be sufficiently enlightened to 
 understand the international aspects of the situation, as an act 
 of hostility to the white metal, and that the consequence would 
 be some political disadvantage. The getting of votes was a 
 dominating consideration. 
 
 The President continued to keep an eye on Europe, in
 
 346 THE STRUGGLE FOR GOLD 
 
 the hope of discovering a moment sufficiently ripe for calling 
 another conference. The repeated warnings of men like 
 Goschen in England, and the growing strength of bimetallism 
 in Germany, together with a complete suspension of her money 
 reform, seemed, indeed, to promise such a moment. With a 
 view, doubtless, of allowing no opportunity to slip, early in 
 1887 he sent another commissioner to Europe, Edward At- 
 kinson, to ascertain the exact condition of foreign sentiment 
 and report whether it would be wise to bring about another 
 conference. Atkinson certainly did not go with any marked 
 prepossessions in favor of bimetallism, and he brought back 
 none, though we must assume, even if it is difficult to believe, 
 that he entered into the spirit of the government he repre- 
 sented. He began his work in June, and reported in October. 
 He appears to have approached the foreign govern- 
 ments from a standpoint differing widely from that of his 
 predecessor, Marble, his method being to represent that the 
 payment of all the interest-bearing bonds which were then 
 due, the impending contraction of the paper currency by the 
 consequent withdrawal of bank notes from circulation, the 
 probable accumulation of the surplus revenue in the Treasury 
 in the form of legal-tender United States notes or coin, and 
 other influences, might soon render important legislation an 
 absolute necessity, both in respect to our monetary system as 
 well as to the reduction of taxation. " This contraction of the 
 paper currency," he told them, according to his report, " might, 
 or must, in almost any case continue long enough to render the 
 circulating medium of the United States insufficient for the 
 wants of the country." Whether this line of argument was 
 suggested by the administration, or was adopted by the com- 
 missioner on his own judgment, it was precisely the kind of 
 argument which was calculated to weaken any sentiment for- 
 eign governments, and especially the English government, 
 may have had in favor of immediate steps for an international
 
 EDWARD ATKINSON'S DIPLOMATIC EFFORT 347 
 
 agreement. Atkinson used the argument to show, as his re- 
 port says, that " a heavy and, perhaps, a long-continued draft 
 of gold might be made upon the reserves of coin in Europe 
 to fill the gap." But the possibility that the currency of the 
 United States would become contracted only suggested to 
 shrewd Europeans the greater probability that Congress would 
 provide a larger use of silver the probability that had for 
 so long stood in the way of securing the cordial co-operation 
 of foreign governments. Atkinson's further suggestion, that 
 the taxes might be reduced, was calculated to cause the British 
 government to withdraw completely into its hole; for in the 
 reduction of our tariff was grounded its hope of such an en- 
 largement of its export trade to this country as would prevent 
 any drain of gold from the Bank of England, and it might 
 enable it, as the bank of a creditor nation, to draw from our 
 gold stock. With such a pleasing picture held out before them, 
 the commissioner could hardly fail to receive an assurance that 
 England proposed to adhere to its traditional policy. In the 
 European discussions the fact that our tariff enabled us to com- 
 mand gold and added to its scarcity, and to the consequent 
 embarrassment in Europe, had been freely and continually 
 commented on. 1 It was not simply a theory, but a conviction, 
 and it has been admitted by low-tariff men 2 in this country 
 when talking of money and not of protection. It was this con- 
 
 1 " Until now Europe has been able without difficulty to furnish 
 the United States of America the quantity of gold required for the 
 payment of the supplies of food which the former has imported; but 
 if this situation continues, if several bad harvests in Europe render 
 necessary the continued importations of provisions from America, 
 and if the latter country, in pursuance of its protectionist policy, pre- 
 vents Europe from paying in European products and manufactured 
 articles, then the exportation of gold to America must go on." Letter 
 of Moritz Levy, Delegate of Denmark to the Conference of 1881, pre- 
 sented at ninth session, June 30th. 
 
 2 " On account of our tariffs, Europe was unable to send us com- 
 modities for the entire volume of our exports, but had to pay for 
 these in great part by gold. The European supply of this metal fell 
 off considerably, and France was the worst sufferer." E. Benjamin 
 Andrews in Political Science Quarterly, June, 1893.
 
 348 THE STRUGGLE FOR GOLD 
 
 viction which had led to an increase in the tariffs in Europe 
 already referred to. The governments defended the step on 
 the ground that it enabled them to protect their gold. We are 
 saying nothing now as to the defensibility of a protective tariff 
 from a purely economic point of view, for in this history we are 
 not immediately concerned with theories, but with practical 
 conditions and results. The suspension of the coinage of 
 silver in this country was needed to induce the principal nations 
 of Europe to listen to the suggestion of a conference; the low- 
 ering of duties on articles manufactured in Europe was ad^ 
 mirably adapted to transform the European attitude of ex- 
 pectancy into a fixed determination to adopt the gold standard. 
 Commissioner Atkinson indirectly encouraged the hope of 
 an enlarged use of silver in the United States, and directly the 
 hope of a reduction of customs duties. We are thu^ quite pre- 
 pared for the results of his investigation. 
 
 " Having," his report says, " thus stated how I have en- 
 deavored to perform the duties assigned to me, I now report 
 that in my judgment: 
 
 " (1) There is no prospect of any change in the present 
 monetary system of European states which can modify or in- 
 fluence the financial policy of the United States at the present 
 time. 
 
 " (2) There are no indications of any change in the policy 
 of the financial authorities of the several states visited by me 
 which warrant any expectation that the subject of a bimetallic 
 treaty for a common legal tender, coupled with the free coin- 
 age of silver, will be seriously considered at the present time 
 by them. 
 
 " (3) There is no indication that the subject of bimetallism 
 has received *any intelligent or serious consideration outside of 
 a small circle in each country named, as a probable or possible 
 remedy for the existing cause of alleged depression in trade. 
 
 " (4) There is no considerable politically organized body of
 
 THE STATE OP EUROPEAN OPINION 849 
 
 influential persons in either country with whom a combination 
 could be made, if such a combination or co-operation were de- 
 sirable on the part of a similar body in the United States, for 
 promoting any definite or practicable measures to bring about 
 the adoption of the bimetallic theory according to the com- 
 monly accepted meaning of that term. The discussion is as yet 
 almost wholly personal and without any concentration of pur- 
 pose, or the presentation of any well-devised measure, capable 
 of being acted upon." 
 
 He also stated that the possibility of a bimetallic treaty 
 without the concurrence of Great Britain, which had been 
 suggested, had no prospect, apparently, even of considera- 
 tion in Germany, and very little elsewhere. The important 
 point, which, he said, he wished to present, was that he had 
 become convinced from his own observation and that of others 
 " that it would be unwise and inexpedient for the United States 
 again to take the initiative in promoting action for a general 
 adoption of a bimetallic legal tender, coupled with the free 
 coinage of silver," for the reason that such action is miscon- 
 strued, and may tend to retard, rather than promote, the object 
 aimed at. He found among the financiers of Europe a con- 
 viction that the United States government was loaded with an 
 excessive quantity of silver dollars, which it could not get into 
 circulation, and, in his opinion, therefore, any effort to pro- 
 mote a bimetallic treaty would not be regarded as a sincere 
 effort to promote a better monetary system, of which all nations 
 could share the benefit, but rather as being induced by a desire 
 to promote the special interest of the United States at the cost 
 of whom it might concern. Another, and a natural conclusion, 
 was that so long as the coinage of the silver dollar was con- 
 tinued, no proposition for a bimetallic treaty could be enter- 
 tained by European states, since they would not consider under 
 any circumstances a proposition for a recoinage of their own 
 silver in order to adjust it to the ratio in the United States.
 
 350 THE STRUGGLE FOR GOLD 
 
 Atkinson also informed the President in his report how he 
 had pointed out to the Europeans .that the concurrence of the 
 United States in any agreement might be secured more easily 
 at that time than thereafter, on account of the probability of 
 the currency changes he had suggested, information which 
 must have afforded the foreign officials an abundance of quiet 
 amusement, coming from a government that had been press- 
 ing for a bimetallic agreement for ten years, and was watching 
 anxiously for an opportunity to call another conference, a 
 government, moreover, the great majority of whose legislature 
 absolutely refused to stop the limited coinage of silver, and an 
 increasing portion of which was demanding the free coinage 
 of silver in utter disregard of Europe or its intentions. An 
 able theorist is rarely a successful diplomat. 
 
 The international bimetallic bucket was completely upset 
 in December, 1887, when the President met the Fiftieth Con- 
 gress with his famous dissertation on the tariff. Congress 
 immediately went to work to give it a legislative embodiment. 
 The President had given his party a new idea, the first that it 
 had possessed, all to itself, since the war, and it became so ab- 
 sorbed in it that silver was almost entirely forgotten. Even 
 the President ignored the subject which two years before had 
 led him to appeal to his party to deliver the people from the 
 certain disaster that awaited them if the coinage of silver was 
 continued. The Secretary of the Treasury was exceedingly 
 mild in his references to the matter, suggesting only a modifica- 
 tion of the law so that its operation could be suspended when 
 the silver in the Treasury exceeded a certain amount. De- 
 pressed European industries waited expectantly for the lower- 
 ing of the gates, and European governments confidently antici- 
 pated a return of the yellow tide. 
 
 During 1888 the public affairs which absorbed the atten- 
 tion of the people of the United States were the tariff debate 
 and a presidential campaign and election. The noteworthy
 
 REPORT OF THE ENGLISH GOLD AND SILVER COMMISSION 351 
 
 monetary event abroad was the final report of the English Gold 
 and Silver Commission, embracing its conclusions. By its 
 painstaking investigation it contributed a valuable addition 
 to the already enormous stock of information, statistical and 
 otherwise, on monetary matters. Its conclusions were divided 
 into three parts : the first, as to some of the general features of 
 the situation, and signed by all the commissioners ; ' the second, 
 a statement signed by Herschell, Fremantle, Lubbock, Farrar, 
 Birch, and Courtney, who, in later discussions, have been dis- 
 tinguished as the monometallists of the commission; and, third, 
 by the other six, or the bimetallists. Briefly stated, the con- 
 clusion was unanimous that bimetallism had, in the two hun- 
 dred years ending in 1873, preserved the ratio between silver 
 
 i That part of the report signed by the whole commission con- 
 tains the following: 
 
 " Looking to the vast changes which occurred prior to 1873 in the 
 relative production of the two metals without any corresponding 
 disturbance in their market value, it appears difficult to us to resist 
 the conclusion that some influence was then at work tending to 
 steady the price of silver, and to keep the ratio which it bore to gold 
 approximately stable. 
 
 " These considerations seem to suggest the existence of some 
 steadying influence in former periods, which has now been removed, 
 and which has left the silver market subject to the free influence of 
 causes the full effect of which was previously kept in check. 
 
 " Now, undoubtedly, the date which forms the dividing line 
 between an epoch of approximate fixity in the relative value of 
 gold and silver and one of marked instability is the year when the 
 bimetallic system which had previously been in force in the Latin 
 Union ceased to be in full operation; and we are irresistibly led to 
 the conclusion that the operation of that system, established as it 
 was in countries the population and commerce of which were con- 
 siderable, exerted a material influence upon the relative value of 
 the two metals. So long as that system was in force, we think that, 
 notwithstanding the changes in the production and use of the pre- 
 cious metals, it kept the market price of silver approximately steady 
 
 nt the ratio fixed by law between them, namely, 15.50 to 1 
 
 Nor does it appear to us a priori unreasonable to suppose that the 
 existence in the Latin Union of a bimetallic system with a ratio of 
 15.50 to 1 fixed between the two metals should have been capable of 
 keeping the market price of silver steady at approximately that 
 ratio. 
 
 " The view that it could only affect the market price to the extent 
 to which there was a demand for it for currency purposes in the 
 Latin Union, or to which it was actually taken to the mints of 
 those countries, is, we think, fallacious."
 
 352 THE STRUGGLE FOR GOLD 
 
 and gold, so that it did not vary more than 3 per cent, above or 
 3 per cent, below the fixed ratio of 15.50 to 1. The six mono- 
 metallists favored bimetallism for every country except their 
 own, and recommended that, to facilitate this object, the Bank 
 of England should hold one-fifth of its specie in silver as per- 
 mitted by the Bank Charter Act of 1844. 1 Sir John Lubbock 
 and Mr. Birch, however, appended a note expressing a doubt 
 whether the ratio could be permanently maintained. The bi- 
 metallists recited the familiar arguments for the effectiveness 
 of the general adoption of the double standard. 
 
 Although a report of six celebrated Englishmen appointed 
 by the government, distinctly and unequivocally favoring the 
 adoption of bimetallism, marks an epoch in the history of this 
 latter-day controversy, and rendered it possible for others to 
 profess the doctrine and still hold their respectability, it cannot 
 be said that it brought England any nearer to a bimetallic 
 agreement than she formerly was. There was nothing re- 
 markable in the admissions of the monometallic half of the 
 commission, for the English delegates to the conference of 
 1881 had freely admitted, even argued, that France, the United 
 States, and Austria, and what other countries they could 
 gather up, would be able to maintain a stable ratio; they ad- 
 mitted all this in the hope that those countries would make the 
 
 'Among the statements made by the monometallic group were 
 these: 
 
 " We think that in any conditions fairly to be contemplated in the 
 future, so far as we can forecast them from the experience of the 
 past, a stable ratio might be maintained if the nations we have al- 
 luded to (England, Germany, the United States, and the Latin Union) 
 were to accept and strictly adhere to bimetallism at the suggested 
 ratio [about the market ratio] 
 
 " In our opinion it might be worth while to meet the great com- 
 mercial nations on any proposal which would lead to a more extended 
 use of silver, and so tend to prevent and apprehend further fall in the 
 value of that metal and to keep its relation to gold more stable. . . . 
 Though unable to recommend the adoption of what is commonly 
 known as bimetallism, we desire it to be understood that we are 
 quite alive to the imperfections of standards of value, which not 
 only fluctuate, but fluctuate independently of each other."
 
 MEANING OF THE COMMISSION'S REPORT 353 
 
 effort and so relieve England of the embarrassments caused by 
 the scarcity of gold and the continued depreciation of silver. 
 The monometallists practically took that ground. Denying 
 that bimetallism could be adopted by Great Britain, they un- 
 dertook to prove that it was practicable for other nations, and 
 they suggested that the government might meet other govern- 
 ments to consider the question of " the larger use of silver." 
 The suggestion that a part of the reserves of the bank be kept in 
 silver was exactly what the government had as a last resort pro- 
 posed to the conference of 1881, on the condition that certain 
 other states should adopt free silver coinage. 
 
 Looking at the report of the commission from its proper 
 place in the history of the controversy, therefore, the most 
 that can be said of it, from the bimetallic standpoint, is that 
 it furnished evidence of a general desire to provide a larger use 
 of silver in the money of the world, and of a growing senti- 
 ment among leading men that international bimetallism, with 
 England included, was the only policy promising to obviate the 
 evils which all, or nearly all, admitted. But it also showed a 
 purpose of the government to still adhere to the gold standard 
 in the expectation that France and the United States, with 
 their great stocks of silver money, would before long be ab- 
 solutely compelled to take steps to enhance the value of the 
 metal, whether England co-operated or not. Very few in 
 England were at this time prepared to think that it would be 
 safe for India to adopt the gold standard, or that it would be 
 possible, without producing a crisis at home, when the Bank 
 of England was with so much difficulty maintaining an ade- 
 quate stock of bullion. 
 
 It is not an unsafe supposition that if at this time the 
 United States had raised its duties on European imports in- 
 stead of threatening to reduce them, and had discontinued the 
 coinage of silver instead of threatening constantly to increase 
 
 it, the disturbance in English opinion would have been suffi- 
 23
 
 354 
 
 THE STRUGGLE FOR GOLD 
 
 cient to have given the growing bimetallists the ascendency, or, 
 at least, sufficient strength to have brought the government 
 into an attitude distinctly favorable to a practical international 
 agreement. The United States could have well afforded, for the 
 sake of this object, to impose a tax which the consumers did 
 not feel so long as they were employed and prosperous. 
 
 One day in March, 1888, the gold reserve in the United 
 States Treasury stood at $218,818,253, the highest point it has 
 ever reached. " The heavy movement of gold from the United 
 States," said Director Leech of the Mint, in his report in No- 
 vember, 1889, " which commenced in May, 1888, and which 
 has continued, with some interruptions, up to the present time, 
 has created a profound stir in the American commercial world 
 and excited some apprehensions of a serious drain upon the 
 gold stock of the United States, as this is the first loss of gold 
 of any magnitude since the resumption of specie payments in 
 this country." A few figures are instructive. The following- 
 shows approximately the excess of imports or exports of gold, 
 reported in six different countries for the years 1881-92, in 
 millions of dollars : 
 
 
 United 
 States. 
 
 England. 
 
 France. 
 
 Germany. 
 
 Austria. 
 
 Russia. 
 
 Imp. 
 
 Exp. 
 
 Imp. 
 
 Exp. 
 
 Imp. 
 
 Exp. 
 
 Imp. 
 
 Exp. 
 
 Imp. 
 
 Exp. 
 
 Imp. 
 
 Exp. 
 
 1881... 
 1882. . . 
 1883. . . 
 1884. . . . 
 1885. . . . 
 1886... 
 1887.... 
 1888.... 
 
 97.5 
 1.8 
 6.1 
 
 18.2 
 
 33.2 
 95 5 
 
 'l8.2 
 '22.2 
 
 ii.'i 
 
 3.2 
 
 "7.0 
 
 "S.O 
 
 41 
 
 27.0 
 
 "e.'i 
 
 "2.0 
 
 2.0 
 17.6 
 
 "8.7 
 8.2 
 12.1 
 
 '13.5 
 
 'si's 
 
 176 
 
 ' '4.2 
 5.6 
 9.1 
 80 
 
 7.5 
 2.5 
 5.0 
 3.4 
 
 8.4 
 6.4 
 5.4 
 3.3 
 
 1.8 
 2.7 
 1.8 
 60 
 
 .... 
 
 . . . . 
 
 47.5 
 49.4 
 12.5 
 2.0 
 2.1 
 9.1 
 12.8 
 10.8 
 11.3 
 .8 
 
 1889.... 
 1890... 
 1891.... 
 1892.... 
 
 1881-88. 
 1889-92. 
 
 
 49.6 
 4.3 
 68.1 
 .5 
 
 16.8 
 45.0 
 29.8 
 
 28.2 
 
 
 
 40.1 
 
 '24.0 
 53.5 
 
 '25.6 
 
 3.6 
 15.6 
 24.9 
 6.7 
 
 
 6.4 
 17.2 
 13.1 
 
 
 
 '55.3 
 89.3 
 
 182.3 
 182.3 
 
 162.9 
 
 40.4 
 122.5 
 
 148.5 
 
 28.7 
 119.8 
 
 35.1 
 35.1 
 
 166.2 
 
 48.6 
 117.6 
 
 88.5 
 
 62.9 
 25.6 
 
 77.7 
 
 26.9 
 
 50.8 
 
 18.4 
 18.4 
 
 72.5 
 
 35.8 
 36.7 
 
 
 
 144.6 
 
 158.3 
 
 146.2 
 12.1 
 
 
 144.6
 
 CONDITIONS OF CIRCULATION IN THE UNITED STATES 
 
 355 
 
 Analyzing these results it is observed that the net gain or 
 loss in the respective countries for the two periods was: 
 
 1881-88. 
 
 Gain. 
 
 United States, 141.9 England, 
 Germany, 8.5 France, 
 
 Austria, 35.8 Russia, 146.2 
 
 1889-92. 
 
 Loss. Gain. Lose. 
 
 6.4 England, 119.8 United States, 122.5 
 14.3 France, 92.0 
 Germany, 50.8 
 Austria, 36.7 
 Russia, 132.5 
 
 166.9 
 
 431.8 
 
 122.5 
 
 What was the cause of this remarkable movement of gold 
 beginning in 1888, so different from that predicted by Mr. 
 Atkinson in 1886? It is important to observe a few facts, first, 
 as to the circulation as given in the reports of the Treasury for 
 the fiscal years ending June 30, 1881, 1885, 1888, and 1892. 
 
 1 Money in treasury, 
 1 Money in circulation, . 
 
 Total money per capita, 
 
 Money in circulation per capita, 
 
 1 Net gold reserve in the Treasury, 
 1 United States notes in circulation, 
 1 Amount uncovered, 
 
 1 Silver dollars and bullion in Treasury, 
 1 Their gold value (average price silver), 
 1 Depreciation, 
 
 1 3 Silver dollars in circulation, . 
 1 Their gold value, 
 1 Depreciation, 
 1 Total depreciation of all silver, 
 
 Proportion of gold to silver money, 4.7 to 1 2.9 to 1 2.5 to 1 1.5 to 1 
 
 1881. 
 
 1885. 
 
 1888. 
 
 1892. 
 
 . 292.3 
 
 525 
 
 690.7 
 
 771.2 
 
 .1,114.2 
 
 1,292.5 
 
 1,372.1 
 
 1,601.2 
 
 . $27.41 
 
 $32.37 
 
 $34.39 
 
 $36.11 
 
 . 21.71 
 
 23.02 
 
 22.88 
 
 24.50 
 
 157.5 
 
 134 
 
 214.2 
 
 114.6 
 
 . 316.4 
 
 311.6 
 
 293.3 
 
 309.5 
 
 . 158.9 
 
 177.6 
 
 79.1 
 
 194.9 
 
 y, 65.8 
 
 169.4 
 
 254.5 
 
 433.8 
 
 :r), 58 
 
 142.6 
 
 187 
 
 311.6 
 
 7.8 
 
 26.8 
 
 77.5 
 
 122.2 
 
 29.3 
 
 39 
 
 55.5 
 
 56.8 
 
 . 25.7 
 
 31.8 
 
 40.2 
 
 37.4 
 
 3.6 
 
 7.2 
 
 15.3 
 
 19.4 
 
 . 11.4 
 
 34 
 
 02.8 
 
 141.6 
 
 1 Funded debt, . 
 
 1 Annual interest charge, 
 
 .1,639.5 1,196.1 
 75 47 
 
 950.5 
 38 
 
 585 
 
 22.8 
 
 1 In millions of dollars. 
 
 3 The depreciation of the silver certificates is not included here, for it 
 has been calculated on the silver dollars in the Treasury which the certifi- 
 cates merely represented. By depreciation, it is, of course, meant the loss 
 in intrinsic value. There was no change in the exchangeable value. 
 
 Were gold exports due to the overloading of the currency 
 with silver that is, did the camel's back, which for ten years
 
 356 THE STRUGGLE FOR GOLD 
 
 had showed no signs of weakness, begin to give way? The op- 
 ponents of silver have commonly attributed it to this cause, 
 asserting that, the currency having become redundant, the 
 cheaper silver drove out the gold, and also that the same re- 
 dundancy frightened foreign investors and induced them to 
 send our securities home. But nowhere are hasty conclusions 
 so unsafe as in the regions of finance, where amid so many in- 
 sidious influences satisfactory conclusions escape even the 
 closest and most impartial study. 
 
 It is difficult to discover in the situation indicated by the 
 facts set forth in the above table any cause for a sudden be- 
 ginning of an unusual export movement of gold. There was 
 certainly no reason for timidity on the part of the holders of 
 our securities, and there is little to show that the weight of sil- 
 ver was beginning to break the back of a currency which had 
 been in constant demand. It appears that the circulation per 
 capita was but slightly larger than in 1881 ; that it was less than 
 in 1885; that the gold reserve was larger than in any previous 
 year; that there was free gold enough in the Treasury to 
 redeem all but $80,000,000 of the greenbacks; that even after 
 deducting the total amount that the silver dollars had lost 
 in their intrinsic value from the gold reserve it still remained 
 nearly as large proportionally as in 1881; that, leaving the 
 value of the silver in the coinage entirely out of consideration, 
 the reserve was over 32 per cent, of all the silver and paper 
 money in circulation exclusive of the national bank notes; that 
 the proportion of gold to silver in the circulation was 2.5 to 1, 
 and nearly as great as in 1885; and that the situation was in 
 every way better than in 1892, a year in which the imports of 
 gold nearly balanced the exports. Nor was there anything in 
 the situation to cause alarm in the commercial and financial 
 circles at home. The new coinage of the yellow metal for 
 the four years 1888-92 equalled the excess of exports over 
 imports, so that the country lost nothing that its production
 
 CHANGES IN THE BALANCE OP TRADE 357 
 
 did not make good. There is no evidence of any marked sell- 
 ing movement of our securities until some time after 1888, 
 and that movement was brought about by no distrust of the 
 financial soundness of the country, but by the necessity of set- 
 tling losses on investments in South American and other securi- 
 ties, as will be noticed later. 
 
 A clearer cause for the beginning of the export movement 
 is revealed by an examination of the trade balances for the 
 period. In the year ending June 30, 1888, the balance was 
 against us for the first time in twelve years. The average bal- 
 ance in our favor from June 30, 1880, to June 30, 1887, was 
 $109,000,000. Between May, 1888, and September, 1889, 
 the balance against us reached $47,825,359. Including the 
 trade of the year 1892, when the balance turned in our favor 
 to the extent of $215,000,000, the average excess of exports of 
 merchandise and silver over their importations for six years 
 from June 30, 1887, was $68,000,000 only. At first sight 
 this might seem to account for the gold exportations, for it will 
 be observed that, deducting from the average excess of exports 
 of merchandise and silver for the first period (1881-87) the 
 annual excess of imports of gold, the result is an unac- 
 counted-for overpayment abroad of $88,900,000; and, adding 
 to the excess of exports of merchandise and silver for the latter 
 period (1888-92) the average excess of gold exports, the appa- 
 rent annual overpayment is $87,800,000, or about that of the 
 first period. This overpayment is commonly attributed not 
 simply to payment on securities and investments held abroad, 
 but to money carried out by tourists and charges for freight in 
 foreign bottoms, operations upon which no very definite calcu- 
 lations can be made. 
 
 But it is unsafe to rely implicitly upon the reported bal- 
 ances in merchandise when drawing conclusions. In a general 
 way an apparently unfavorable balance affects the rate of ex- 
 change, but no fixed rules can be laid down. The real balance 
 
 O /
 
 358 THE STRUGGLE FOR GOLD 
 
 in these international operations is always undetermined, and 
 at times, undoubtedly, differs widely from the apparent bal- 
 ance; and the rate of exchange affects imports and exports of 
 merchandise quite as much as it is affected by them. A rate 
 that calls for the export of specie naturally stimulates the 
 export of merchandise by adding to the prospective profit of 
 the export merchant, and conversely discourages imports of 
 merchandise. 1 We should look, therefore, for a decline in 
 imports in the years 1888-92, and an increase in exports. As 
 a matter of fact, the value of our imports increased more than 
 the value of our exports. The value of our average annual 
 exports of merchandise during 1888-92 wfcs but $77,000,000 
 greater than during 1881-87, while the value of the average 
 annual imports was $120,000,000 greater in the latter period 
 than in the former. If the year 1892, when exports reached 
 an unprecedented figure, is omitted from the latter period, the 
 average annual value of our exports of merchandise was only 
 $30,000,000 greater than during 1881-87; that of imports 
 $110,000,000 greater. 
 
 The real explanation of this anomalous economic condition 
 seems to be that the sudden export movement of gold was not 
 called for by the commercial conditions prevailing at the time. 
 The rate of exchange indicated this. The movement did not 
 have its origin in any distrust of our financial condition, nor 
 in a redundancy of silver currency, nor even in a decline in our 
 favorable balance of trade, which, however, aided it. It orig- 
 inated in another remarkable demand for gold in Europe, 
 which was compelled to have it, even if it paid a high price. 
 The shipments of gold in 1888 and 1889 were mostly made 
 
 i After the war of 1870--71 the exports of France increased enor- 
 mously for several years, because the large payments made to Ger- 
 many caused foreign paper to rise considerably above par, and the 
 profits that exporters obtained from the paper they drew on foreign 
 debtors were such that they could content themselves with an ex- 
 tremely small profit on the price of their goods, and could, if neces- 
 sary, sell them at an apparent loss.
 
 EUROPE'S PRESSING DEMAND FOR GOLD 859 
 
 when the rate of exchange was below the figure which enabled 
 shipments to be made in London without loss. The Director of 
 the Mint said in his report for 1891, after a tabular statement of 
 the gold exports: "An examination of the above table discloses 
 the very singular fact that of this large amount ($70,000,000) 
 all but $9,300,000 was shipped when the rate of sterling ex- 
 change was below the point (about $4.886) at which gold 
 shipments can be made without loss. The movement, there- 
 fore, must have been artificially stimulated by banks and 
 bankers in Europe paying a premium on gold, or making dis- 
 counts to bill-drawers for cash remittances." The price of 
 exchange in New York would necessarily have been nearly 
 $4.89 to make shipments to London profitable for sale to the 
 Bank of England, for the margin of 1 pence per ounce at the 
 bank between the buying and selling price would cause own- 
 ers of bullion in London to accept any price above 77s. 9d. for 
 shipment this way. Yet large amounts of gold were sent to 
 London when the rate of exchange was below $4.88. 
 
 Why this demand for gold? The Bank of France began in 
 1888, in a determined way, to increase its gold stock, and in 
 less than nine months $63,790,000 was added to it. In the fall 
 of 1889 its stock of gold was the largest it had ever held. The 
 Bank of Germany was trying to accomplish the same thing. 
 Both institutions began to credit banking-houses in Paris 
 and Berlin with the value of the bullion shipped to them from 
 New York at the date of shipment, thus lessening the cost of 
 the movement by the interest on the amount during the whole 
 period of transit. This was done to attract gold from the im- 
 mense stock in America. As during 1888 and 1889 exchange 
 between London and Paris was in favor of the latter, and the 
 reserve in the Bank of England was too low to permit of loss 
 without serious consequences, England imported our gold at a 
 loss to pay its debts in France, not being able to pay them from 
 its own stock of gold. A little later came the Baring crisis,
 
 360 THE STRUGGLE FOR GOLD 
 
 and the consequent losses incurred by English capitalists in 
 South American countries compelled the Bank of England to 
 borrow a large amount from the Bank of France to prevent a 
 serious disaster. Soon after Austria demanded a supply of 
 yellow metal for the adoption of the gold standard ; Roumania 
 did the same on a smaller scale; Russia, which for years had 
 furnished the world with a large amount of gold, suddenly 
 began to absorb its own product and actually import vast 
 stores; and India took larger quantities, which never returned. 
 
 During this pressing demand for the money metal of the 
 world there was no stock so easy to draw from as that of the 
 United States. While the great banks of Europe were using 
 various devices to protect their stock and to attract additions to 
 it, the gold stock of the United States Treasury was open to all 
 comers on easy terms. There was no conveniently shifting 
 discount rate as in England and Germany, and no premium 
 charge as in France. The Treasury did not pay a premium on 
 foreign coin as did the Bank of England on American dol- 
 lars, and offered importers no inducements in the way of inter- 
 est on shipments while in transit, though late in 1891 the 
 Treasury did pass an order allowing depositors of foreign' coin 
 and bullion approximate spot cash value for it as soon as re- 
 ceived at the counter of the assay office, thus saving interest 
 on the value of the deposit pending melting and assay. But 
 this could not compete against the far more generous terms of 
 foreign banks. Europe simply demanded gold, and could get 
 it nowhere else so easily as here, and it took it, paying the loss 
 on shipments necessitated by the rate of exchange. 
 
 The decline in American exports may have been due to 
 some extent to the fact that the rate of exchange offered no ad- 
 ditional profit to the exporter, to some extent also to the con- 
 tinued decline in prices, but more to the falling off of the 
 ability of the consuming classes of Europe to consume. The 
 long depression in Europe, and especially in England, had re-
 
 UNSATISFACTORY SITUATION IN ENGLAND 361 
 
 duced the mass of the people to a condition requiring the strict- 
 est economy of expenditures even for the necessities of life. 
 Profits had been lost and wages cut. The spectre of socialistic 
 discontent grew larger and more distinct. The United States 
 prospered, but still suffered a considerable loss through this 
 decreased demand for their great staples, the prices of which 
 steadily fell. It makes no difference whether the phenomenon, 
 is called over-production or under-consumption ; but it makes 
 a vast difference to a productive people if the power to consume 
 does not go hand in hand with the power to produce. 
 
 England was troubled with the very condition of things 
 which she had feared in 1881, and which her delegates had 
 sought to have others prevent. Austria was preparing to adopt 
 the gold standard, and Russia's gold fund had a military aspect 
 unpleasant to contemplate. Moreover, her own India was not 
 simply usurping the Eastern markets with some classes of 
 manufactures, but was absorbing an increasing amount of 
 gold each year, intercepting some that would have otherwise 
 gone to London, and also drawing it from London, where it 
 could least be spared. During the ten years 1880 to 1890 that 
 colony imported 36,000,000 of the metal, and in 1890 the 
 importations rose to unprecedented figures. The opinion that 
 she might as well adopt the gold standard began to be ex- 
 pressed, for she would require no more gold than she was 
 already taking, and which, immediately upon arrival, went into 
 hiding-places, where it was of no further use to commerce. 
 
 On account of the peculiar condition of her trade, England 
 was finding it next to impossible to accumulate the precious 
 metal for which so many others were grasping. In 1881 the 
 reserve of the bank was 41,000,000; in 1889 it was only 
 19,000,000. The proportion of cash to liabilities had fallen 
 in ten years about 20 per cent. The bank had changed its 
 rate of discount nearly a hundred times, the variations amount- 
 ing to 4 per cent. Some advantages accrued to the holders of
 
 862 THE STRUGGLE FOR GOLD 
 
 interest notes, but this only occasioned a discontent among 
 the producers which was forcibly revealed in the parliamentary 
 debates in the spring of 1890, when the question of the adop- 
 tion of bimetallism was submitted and secured the votes of 
 one-third of the Commons. 
 
 A former president of the Liverpool Chamber of Com- 
 merce submitted 140 petitions with 60,000 signatures asking 
 for the re-establishment of the bimetallic system. He described 
 the losses which labor was suffering by the appreciation of 
 gold, and said it w y as a tax which the drones of society levied 
 on the working bees. The welfare of society could not be 
 promoted if the income of the idle non-producing class was 
 raised at the expense of the toiling masses, and he held that 
 one-half of this new burden was derived from the demonetiza- 
 tion of silver. He denounced the attempt to depreciate silver 
 as a huge fraud on civilization, and argued that the contraction 
 of the currency was merely in the interest of the rich, and 
 was opposed to the interest of the whole nation. Sir William 
 Houldsworth, a Manchester cotton-spinner, and one of the 
 members of the Gold and Silver Commission, declared that it 
 was incorrect to say that the wage worker found indemnifica- 
 tion in the fall of prices of the necessaries of life for the loss in 
 work or wages, and if the equalization took place at all, it must 
 do so very late. For these reasons he said the wage workers 
 were earnestly in favor of the bimetallic petition. A Cheshire 
 cotton-spinner lamented the pitiable condition of all debtors 
 of the country who had assumed burdens under entirely differ- 
 ent circumstances, and said that the producers were the vic- 
 tims of monetary vivisection. The monometallists replied that 
 the participation of England in a bimetallic Congress would 
 mean that England, the great creditor of the world, was to 
 invite the debtor nations to deliberate whether the debts con- 
 tracted in gold since 1816 might, be liquidated in depreciated 
 silver. A union would last just so long as England was willing
 
 BALFOUR AND G08CHEN ON BIMETALLISM 363 
 
 to remain in it, to be shorn like a gentle sheep by the debtor na 
 tions. This opinion was put forth by the representatives of the 
 government, but the Secretary for Ireland, Arthur Balfour, 
 separated from his associates and declared that he subscribed to 
 " the bimetallic heresy." He maintained that it was wrong to 
 imagine that all the inconveniences since 1874 had sprung 
 from a divergence of the values of the two metals, but that the 
 divergence had had a large share in them, that it would be 
 better for the country to suffer from inflation than from con- 
 traction, and that an international agreement was possible 
 and desirable, but could not perhaps be carried out against the 
 prevailing opinion of mercantile circles. " But," he asked, 
 " if to-morrow America were to decide to use no more silver, 
 but place itself entirely on a gold basis, where would the 
 prices be?" 
 
 In a public meeting at about the same time Goschen ex- 
 pressed his shame at the sensitiveness of the market to a de- 
 mand for gold from Brazil or other small countries ; the scarcity 
 of a standard metal in England was humiliating; and he said 
 of bimetallism that he considered it a very serious demand 
 for a change which bimetallists deplore and attempt to remedy. 
 " I fully appreciate the importance of the question. I feel it 
 is almost impossible to exaggerate its importance." 
 
 During the summer of 1889, and in connection with the 
 Exposition at Paris, the French government organized several 
 conferences, and one of them was on money. The commission- 
 ers of the various governments to the fair were asked to ap- 
 point representatives, and a few did so, but no one appeared 
 for the United States. It was a sort of oratorical tournament 
 participated in by unofficial representatives, and lasted but two 
 days. Thus it could accomplish nothing, and sought to accom- 
 plish nothing, though the speeches showed that, in the per- 
 sonal opinion of those present, the monetary situation was in 
 desperate need of a remedy.
 
 364 THE STRUGGLE FOR GOLD 
 
 The feeling in the Old World, and especially in England, 
 on which everything depended, was such that if the United 
 States had suspended silver coinage, placed themselves entirely 
 on a gold basis, but announced their attitude as one of readiness 
 to confer with Europe when Europe discovered that she was 
 ready, the prospects would have been excellent for the accom- 
 plishment of that which this country had twice unsuccessfully 
 sought. But, as usual, the occasion was taken for another out- 
 burst of free-silver enthusiasm. By a thorough organization of 
 the silver forces, and by the admission of more territories to 
 statehood, the issue had assumed great importance in politics, 
 and after Cleveland's defeat the Democrats rallied to free sil- 
 ver with a vim born of the feeling that they had no administra- 
 tion of their own to hurt, and that they might hurt " the other 
 fellows " by capturing the silver states. The new administra- 
 tion was far from being unfriendly to silver, and Republican 
 managers generally considered that something should be done, 
 for a majority of the new Senate was plainly in favor of free 
 coinage. It was a political necessity to propose something, 
 for otherwise a free silver bill might go to the President, and 
 his party, while opposing the free coinage of silver on principle, 
 dreaded the effects of a veto of a free-coinage measure. 
 
 Accordingly, Secretary Windom presented in December, 
 1889, his plan for silver purchases. He began with the premise 
 that the continued coinage of silver dollars at a constantly in- 
 creasing monthly quota was "a disturbing element in the other- 
 wise excellent financial condition of the country, and a positive 
 hinderance to any international agreement for free coinage," 
 but he said the policy of stopping the purchase of silver and 
 throwing an additional thirty million ounces on the market, 
 while it might be the shortest way to an international agree- 
 ment, would probably be attended by financial and commercial 
 disasters at home and abroad, and a less dangerous solution 
 should be sought. He pronounced the various propositions
 
 SECRETARY WINDOM'S PLAN OP SILVER PURCHASES 365 
 
 which had been made, including the free coinage of silver, im- 
 practicable, and then proposed the following measure: 
 
 " Issue treasury notes against deposits of silver bullion at the 
 market price of silver when deposited, payable on demand in such 
 quantities of silver bullion as will equal in value, at the date of 
 presentation, the number of dollars expressed on the face of the 
 notes at the market price of silver; or in gold, at the option of the 
 government; or in silver dollars, at the option of the holder. Repeal 
 the compulsory feature of the present coinage act." 
 
 It was, in brief, a proposition to open the mints to the free 
 deposit of silver, the market value of the same (not to exceed 
 $1 for 412.5 grains of standard silver) at the time of deposit 
 to be paid in treasury notes, receivable for all dues, and to be 
 counted as a part of the lawful reserve of banks. Among the 
 possible advantages of the measure, he suggested that, if it 
 proved successful, other nations might find it in their interest 
 to adopt it, without waiting for an international agreement, 
 and, should concerted action be deemed desirable, it could then 
 be more easily secured. lie did not consider that a restriction 
 of the amount to be purchased would be wise, for it Avould be 
 felt in the silver market, and make the law inconvenient in op- 
 eration, but, if a restriction was made, it should be to the 
 productions of the mines of the United States. 
 
 As the measure was finally formulated, however, the pur- 
 chases were to be limited to silver produced in this country, 
 and in such form it was introduced on January 20, 1890. A 
 number of free coinage bills were also put in. It is unneces- 
 sary to enter into the remarkable debates on the silver question 
 in this Congress, the various forms the measure took, and the 
 various reports that were made. The free-silver men fought 
 desperately. The history of the act of 1873 was again raked 
 up; spurious quotations were made to show that Ernest Seyd 
 came to this country to bribe Congress to adopt the gold 
 standard, and attempts were made to support the charge by 
 affidavits. It was one of those Congressional silver bat- 
 tles with which we, in the United States, have become familiar.
 
 366 THE STRUGGLE FOR GOLD 
 
 As it passed the House the bill contained the bullion re- 
 demption clause, a limitation of purchases to $4,500,000 worth 
 monthly, and a section providing for free coinage when silver 
 reached parity with gold at the coming ratio. If this had 
 passed, it might have quickly resulted in free coinage, for the 
 silver producers could have held back their product till parity 
 was reached, and then felt safe to let it go. But as the bill 
 passed the Senate, a few days later, by a vote of 42 to 25, it was 
 an unlimited-coinage measure pure and unconditional, owing 
 to the adoption of an amendment which stripped it of every 
 feature of Secretary Windom's plan, and made the coinage of 
 dollars of full legal tender absolutely free. The House non- 
 concurred by a vote of 135 to 152 a narrow escape and 
 it went to a conference committee, from which it came in 
 much the same shape as it had passed the House, except that 
 instead of requiring a monthly purchase to the value of $4,- 
 500,000, it called for the purchase of 4,500,000 ounces a 
 month. It was finally passed, signed July 14, and made opera- 
 tive August 13. 
 
 Its effect on the price of silver had been largely anticipated 
 before its passage, the quotation having been in March as low 
 as 48f d., from which it jumped to 48d. in April, and 49d. in 
 June. When the bill became law, in July, silver was quoted at 
 50|, and when it went into effect in August at 54, and three 
 weeks later at 54f , a price which the metal had not touched 
 since March, 1878 over twelve years. The silver men were 
 jubilant; some bimetallists cited it as proof of their previous 
 assertions that demonetization alone had reduced the price 
 of the metal, and financial circles were generally gratified at the 
 apparently favorable workings of the policy. Bimetallists in 
 Europe predicted a flattering future for silver, one of the best 
 authorities in monetary statistics estimating that the world's 
 use of silver would thenceforth be 146,000,000 ounces a year, 
 while the production could not rise above 130,000,000 ounces.
 
 THE PRICE OF SILVER AGAIN DECLINES 367 
 
 " Where is the balance of 16,000,000 ounces to come from?" 
 asked Ottomar Haupt, of Austria. " Neither will Germany sell 
 any more of her silver thalers nor Italy her demonetized pias- 
 ters. As regards the other countries, none will move in the sil- 
 ver question. The American mint price works out at $1.29, 
 equal to 59rf. Who will sell with such a prospect before him?" 
 
 But producers and speculators had been holding back a 
 quantity of silver since the first of the year in the expectation 
 of higher prices. This had had the effect of stiffening the 
 price prior to the passage of the act, but soon afterwards, 
 when they began to take it to the government, the price began 
 to weaken. By November it was quoted as low as 45rf. On 
 a falling market everybody who had silver sold. Besides, Rou- 
 mania, which had adopted the gold standard in March, with- 
 drew 25,000,000 francs of silver and put it on the market. 
 Considerable foreign silver came to this country; indeed, the 
 situation was altogether unprecedented. The imports of for- 
 eign silver into the United States from May 1 to November 1 
 exceeded the exports of domestic silver by some $7,750,000, 
 while for the corresponding period of the year before the ex- 
 ports exceeded the imports by nearly $8,000,000. The move- 
 ment of silver from San Francisco to the Orient, which had 
 previously averaged about $7,000,000 a year, stopped entirely. 
 The effect of this was not simply to produce a surplus of silver 
 in the American market, and so decrease the price, but to 
 further decrease our trade balance, so that gold had to take the 
 place of the silver usually demanded for export. Europe was 
 thus enabled to secure gold from us at a little less expense. 
 
 The act undoubtedly afforded some little relief in the fall 
 of 1890, when a severe stringency prevailed in the New York 
 money market attributed to the influences of the Baring crisis; 
 but on the whole our circulation did not increase. Up to July 
 1, 1891, the government had put out some $50,000,000 in 
 treasury notes, but in the same period about $65,000,000 of
 
 368 THE STEUGGLE FOR GOLD 
 
 gold was exported. This was the most serious loss we had yet 
 experienced, but, as in the two previous years, it was shipped 
 mostly when the rate of exchange made shipments a losing- 
 operation. The heavy losses in Europe compelled the banks 
 to get gold at any price. The Bank of England paid a pre- 
 mium on American dollars, and raised it several times. The 
 new treasury notes affected the situation only as extra instru- 
 ments for drawing gold from the treasury. It would have 
 been drawn out anyway. 
 
 Speaking of this period towards the end of January, 1891, 
 at Leeds, the English Chancellor of the Exchequer said : 
 
 " We were on the brink of a crisis, through which it might have 
 been difficult for the soundest to pass unscathed, for the wealthiest 
 to have escaped. It was a time when none who had liabilities or 
 engagements to pay could say how they would pay them, if a con- 
 dition of things were to continue under which produce could not 
 be sold, under which bills could not be discounted, under which 
 there appeared an absence of cash sufficient to discharge the lia- 
 bilities of the general public. That was the position at home, and 
 I will tell you what was at stake. You risked the deposition of Lou- 
 don as the banking centre of the universe; you risked the supremacy 
 of English credit; you risked the transfer of the business of this 
 country to other countries, if such a catastrophe had occurred as you 
 were on the eve of witnessing. I cannot exaggerate the danger, 
 the immediate danger, to which this country was exposed at that 
 time. You escaped from a catastrophe which would have affected 
 every town, every industry; to use a common phrase, you have es- 
 caped by the skin of your teeth." 
 
 G oschen's theme at this time, as it had been for some years, 
 was the scarcity of gold for monetary purposes. Speaking as 
 the Chancellor of the Exchequer, his words had a more marked 
 effect, and financiers began to consider seriously whether Eng- 
 land was not at a disadvantage in the scramble for gold, a dis- 
 advantage which might threaten her commercial supremacy. 
 Lidderdale, who was Governor of the bank during the crisis, 
 joined the ranks of the bimetallists. That stanch advocate of 
 monometallism, the Economist, said, in speaking of the efforts 
 to recuperate in 1891: "A struggle for gold lasted from 
 January to December, as the bank was obliged again and again 
 to make a strong effort to induce deposits, but found it impossi-
 
 ANOTHER CONFERENCE CONSIDERED 369 
 
 ble to keep them, for no sooner had it built up its reserves than 
 the market prices fell and a new overflow began." Goschen 
 endeavored to devise means to strengthen the reserves of the 
 joint stock banks, and he induced them to make more frequent 
 reports, but the proportion of their cash to reserves, which was 
 only 12.9 per cent, at the end of 1890, had risen to but 13.7 
 by the end of 1891. To help out the Bank of England he 
 proposed to have it issue one-pound notes to exchange for a 
 part of the gold in the currency, and he made other proposi- 
 tions for means to provide against future crises of the kind. An 
 estimate of the gold in England made in 1884 had placed the 
 amount at 120,000,000; Goschen held that in 1891 there 
 was only about 70,000,000. 
 
 The continued depreciation of silver, notwithstanding pur- 
 chases under the act of 1890 in this country, was a great dis- 
 appointment to the administration, and aroused the silver men 
 to fresh agitation of unlimited coinage at the very time we 
 were negotiating for another conference. Secretary Win- 
 dom hoped for a change for the better when the sil- 
 ver surplus had been absorbed, as he said in his report, 
 and the President reminded Congress that a longer trial should 
 be allowed the measure. But as it might prove a failure, and 
 as an election was coming on in 1892, the possibilities of an- 
 other conference were seriously considered. It seemed to be 
 the misfortune of the United States to always turn to inter- 
 national conferences as a means of escape from free coinage 
 when the success of such conferences depended upon a vigor- 
 ous and sincere refusal of this country to do anything for silver 
 till Europe should act. President Harrison said in his message 
 at the end of 1890 that, while it had not been thought best to 
 renew formally the suggestion of another conference, care had 
 been taken to observe closely any change in the situation 
 abroad, and the monetary disturbances there, he thought, were 
 not unlikely to suggest a re-examination of the subject. He 
 24
 
 370 THE STRUGGLE FOR GOLD 
 
 added : " Our very large supply of gold will, if not lost by im- 
 pulsive legislation in the supposed interest of silver, give us a 
 position of advantage in promoting a permanent and safe inter- 
 national agreement for the free use of silver as a coin 
 metal." 
 
 As early as the month of April, 1891, the Treasury De- 
 partment began an investigation to ascertain the sentiment of 
 the European governments as to a conference. England was 
 found to be ready for a meeting, but not to consider the free 
 use of silver. The government met our advances with that 
 stereotyped formula which had been a regular feature of pre- 
 vious conferences, that the acceptance of an invitation to meet 
 for the consideration of a fixed ratio between gold and silver 
 might give rise to a misunderstanding by implying that the 
 English government had some doubt as to the maintenance of 
 the monetary system which had been in force since 1816. The 
 commercial interests of England and her colonies, it was ad- 
 mitted, made the fall and fluctuation of silver a matter of con- 
 cern, and it therefore asked that the invitation be, if possible, 
 modified so as to call merely for the consideration of what 
 measures, if any, could be adopted to increase the use of silver 
 as currency. As such an increase might, of course, embrace 
 even the free coinage of silver by all nations, the invitation 
 was finally sent out in that form, and nearly all the powers to 
 which it was sent accepted. Much delay was occasioned, how- 
 ever, in the settlement of a place of meeting. As usual, Paris 
 seemed the most convenient centre, but France was far less 
 enthusiastic than in 1881, and the government rather resented 
 the imputations, which had been thrown out from some quar- 
 ters, that her frequent advances in the cause of bimetallism 
 were due to self-interest. She had been very successful in the 
 accumulation of a large gold reserve, had just saved the Bank 
 of England, and preferred that some other government should 
 act as host. She therefore sent a polite declination to accept
 
 EVENTS OP AN UNFAVORABLE CHARACTER 371 
 
 the honor of making Paris the place of meeting. England was 
 sounded, but the government expressed a doubt as to whether 
 the interests of the conference would be promoted at London. 
 Finally Brussels was determined upon, and it was on the whole 
 a very appropriate place. There had been some change in the 
 opinion of the Belgian government, which in every conference 
 theretofore had stood as an uncompromising adherent of gold 
 monometallism. 
 
 Negotiations on this point and some others went on during 
 a greater part of 1891 and 1892, so that the time of meeting 
 was deferred till November of the latter year. Some writers 
 have held that the taint of partisan politics attached to the 
 scheme from the beginning, and was responsible for the delay; 
 but there do not seem to be sufficient grounds for the belief. 
 It is easy to charge with political designs those in official life, 
 and none know so well as such officials how commonly steps 
 taken with the highest motives are attributed to partisanship 
 or worse. If the design had been to use the conference to take 
 the Silver Question out of the presidential campaign of 1892, 
 it would hardly have been delayed till after the election ; and 
 had it been possible to have arranged the meeting so that it 
 would have been in progress during an exciting campaign, it 
 is doubtful if it would have been wise, for other than political 
 reasons. 
 
 It is unquestionably true, however, that during the interval 
 of delay some events of an unfavorable character occurred 
 abroad. The financial condition of England improved, and 
 while the bimetallic sentiment continued to grow in strength 
 and influence, the government, by a change of party control, 
 became decidedly less friendly to bimetallism. The agitation 
 which began in 1891, after Sir David Barbour's financial state- 
 ment, for placing India on a gold standard, gradually assumed 
 the form of a definite policy in 1892, under the growing im- 
 pression that the United States would repeal the act of 1890,
 
 372 THE STRUGGLE FOR GOLD 
 
 and thus leave India to suffer alone from a frightful drop in 
 silver. But the Indian government would have much pre- 
 ferred bimetallism. The Secretary of the Bengal Chamber of 
 Commerce wrote to the Indian government in February, 1892, 
 urging that, if there were no possibility of a bimetallic agree- 
 ment, India must endeavor to go to the gold standard as 
 speedily as possible. The Governor-General, Marquis of 
 Lansdowne, urged the policy repeatedly during 1892 in his 
 letters to the English government. In June he expressed his 
 satisfaction at the acceptance of the invitation of the United 
 States to take part in a conference, but regretted that it had 
 not been summoned to .consider the adoption of an interna- 
 tional agreement for the free coinage of silver instead of a 
 more extended use of the metal. He could not overlook the 
 strong opposition to the introduction of the double legal ten- 
 der in England, and feared that a refusal of England to do so 
 might be fatal to India. Reviewing all the facts in the case, 
 he said : " We desire to place on record, for your lordship's 
 information, our deliberate opinion that, if it becomes evident 
 that the international conference is. unlikely to arrive at a 
 satisfactory conclusion, and if a direct agreement between 
 India and the United States is found to be unattainable, the 
 government of India should at once close its mints to the free 
 coinage of silver, and at once make arrangements for the intro- 
 duction of the gold standard." He urged that measures be 
 taken in advance so that India could go to a gold standard at 
 any time when it became apparent that the conference would 
 fail, or that the United States would abandon silver purchases. 
 Petitions poured in from merchants in both India and Eng- 
 land, for bimetallism, if possible, but if not, for the gold stand- 
 ard for Indian currency, and the government responded by ap- 
 pointing in September a commission to investigate the question 
 and advise as to the best course to pursue. The members were 
 Lord Herschell, who had presided over the Commissions on
 
 AUSTRIA-HUNGARY ADOPTS THE GOLD STANDARD 373 
 
 the Depression of Trade and on Gold and Silver, Leonard 
 Courtney, Thomas Farrar, Sir Reginald E. Welby, Arthur 
 Godley, Sir Richard Strachey, and Bertram Currie. 
 
 But no sooner had the commission been appointed than pro- 
 tests against meddling with the currency began to pour in 
 from the Indian producing and trading classes. They claimed 
 that the country made an enormous gain in its international 
 trade through the depreciation of silver, the increased receipts 
 for exports far exceeding the increased rupee price paid for 
 imports. Associations all over India petitioned the House of 
 Commons to refuse to permit the adoption of the plan urged by 
 the government, and which they claimed would benefit the 
 functionaries only. With such contradictory appeals before 
 them the commission suspended its labors in November to 
 await the result of the international conference. 
 
 Another unfavorable occurrence during the delay in the 
 arrangements was the definite adoption by Austria-Hungary 
 of the gold standard. It is a curious fact, and significant as 
 showing how our efforts to help silver have always hurt it, that 
 this event was hastened by the Silver Purchase Act of 1890, 
 and the consequent temporary rise in silver. Otherwise, it 
 is doubtful if it would have taken place for some time. The 
 situation was this: the great industry of Hungary is agricult- 
 ure, and, while there was a marked difference in the relative 
 value of gold and silver, it was to the advantage of Hungarian 
 land-owners to retain a silver currency, inasmuch as the wages 
 they paid to the laborer who produced their crops was silver, 
 while their surplus was marketed in central Europe \vhere na- 
 tions maintained a gold basis, the gain in exchanging the two 
 metals being an important part of the land-owners' profits. On 
 the other hand, Austria is a manufacturing country, and much 
 of the raw material had to be purchased abroad with gold, while 
 the products of the factories were largely marketed in Hun- 
 gary, where silver was received for them. Austria could not in-
 
 374 THE STRUGGLE FOR GOLD 
 
 duce Hungary to agree, therefore, to her programme, and prob- 
 ably would have failed, had not the price of silver rose so near 
 to parity with gold in the summer of 1890. At that time the 
 two governments agreed to nominate legislative committees to 
 meet and discuss the subject of a currency basis, and, if possi- 
 ble, arrange a coinage which would be satisfactory to both sec- 
 tions of the country. The result was that in the summer of 
 1891 the two governments agreed to make gold the standard of 
 their future currency. Many troublesome questions came up, 
 such as whether the value of the future florin should be given 
 the value of the existing gold florin, or of the existing silver 
 florin, but a compromise was made by reducing the value of 
 the gold florin but overvaluing the old silver coins, and the 
 laws were finally passed in the summer of 1892, or at the same 
 time that the Indian government was appealing for a gold 
 standard. 
 
 Another unfavorable circumstance was the apparent 
 change in Dutch opinion. The Netherlands government had 
 been a strong advocate of the double standard in the mone- 
 tary conferences, and was yet upon broad lines, for her finances 
 were still in the same hands, but further experience had con- 
 vinced her statesmen that it would cost their government too 
 much to adopt bimetallism under any agreement for a limited 
 union. The government was using every means in its power to 
 decrease its silver and increase its gold currency. 
 
 But perhaps the most unfortunate circumstance of all 
 in its influence was the changes that had meanwhile oc- 
 curred in gold holdings of European banks. Before this the 
 United States had appeared at conferences as an easy accu- 
 mulator and large holder of the coveted metal, and Europe had 
 been troubled with low reserves. The situation was reversed. 
 A shrinkage in the gold reserve was troubling the United 
 States, while all the banks of issue in Europe had by desperate 
 expedients improved their situations, some of them in a marked
 
 CHANGES IN GOLD HOLDINGS 375 
 
 manner. The following table shows the approximate condition 
 of the reserves in the principal banks of Europe at the time the 
 United States began to consider the question of another con- 
 ference early in 1891 and at the time the conference met: 
 
 1891. 1892. 
 
 Bank of England, . . $100,000,000 $117,000,000 
 
 Bank of France, . . 200,000,000 325,000,000 
 
 Bank of Germany, . . 125,000,000 1(X),000,000 
 
 Bank of Russia, . . 205,000,000 320,000,000 
 
 United States gold reserve, 190,000,000 114,000,000 
 
 The change is apparent. In the course of eighteen months 
 the chief European banks of issue made a large gain in their 
 gold resources. Still more striking was the change between 
 the time of the conference of 1881 and that of 1892. In 1881 
 France had been a severe sufferer from loss of gold; in 1892 
 France was content, but England had been the greatest suf- 
 ferer, and no foreign nation took so much interest in the con- 
 ference of 1892 as England. She was the predominating in- 
 fluence in it, but still was the great obstruction to international 
 bimetallism.
 
 CHAPTER VIII 
 
 PROPOSED PLANS FOR A LARGER USE OF SILVER THE CONFERENCE 
 
 OF 1892 
 
 OF the fifty delegates to the monetary conference of 1892, 
 but four had represented their governments in that of 1881 
 Sir Charles Fremaritle, of England, Charles Edouard 
 Lardy, of Switzerland, Dr. Hans Forssell, of Sweden, and 
 Simonelli, of Italy; Lardy alone had been a delegate to the 
 conference of 1878. One, Sir Rivers Wilson, of England, had 
 sat in the conference of 1867. The Indian Currency Commis- 
 sion was represented by two delegates, General Strachey and 
 Bertram Currie, the first a bimetallist and the second a gold 
 monometallist. Two had served on the English Gold and 
 Silver Commission of 1886, Sir Charles Fremantle and Sir 
 "William Houldsworth, the former a gold monometallist and 
 the latter one of the most ardent bimetallists in the United 
 Kingdom. Such a bifurcated delegation from England was 
 a novelty in monetary conferences, and indicated the change 
 in public opinion; but, with the other members, gold mono- 
 metallism easily predominated. The Erench delegation was 
 entirely new, and it is noticeable that, while in 1881 France 
 was represented by such earnest bimetallists as De Normandie 
 and Cernuschi, in 1892 her delegation was an indifferent one. 
 On the other hand, Belgium, which sent to the conference of 
 1881 the stanchest gold advocate there, Euodore Pirmez, in 
 1892 \vas represented by one disciple of Pirmez, and by 
 one ardent bimetallist, a frequent contributor to the reviews, 
 and by three whose positions as to bimetallism were less de- 
 fined. Mexico and Roumania appeared for the first time in
 
 THE GOVERNMENTS AND TIIEIK REPRESENTATIVES 377 
 
 monetary conferences. The chief delegates of nine of the gov- 
 ernments were Ministers to Belgium, and not considered spe- 
 cialists in monetary matters. The full list of delegates is as 
 follows : 
 
 Germany: 
 
 Count Alvensleben, Minister to Belgium. 
 
 Dr. von Glasenapp, Councillor in the Imperial Treasury De- 
 partment. 
 
 Hartuiig, Director of the Imperial Bank. 
 Austria-HuiHjary: 
 
 Count Khevenhiiller Metsch, Minister to Belgium. 
 Belgium: 
 
 Montefiore Levi, Senator. 
 
 Devolder, Director of the Society for Promoting National 
 Industry. 
 
 Weber, Vice-Governor of the National Bank. 
 
 A. Allard, Honorary Director of the Mint. 
 
 Sainctelette, Commissioner of the Mint. 
 Denmark: 
 
 C. F. Tietgen, Privy Councillor of State. 
 
 Frederic G. Schack de Brockdorff, Consul-General at Ant- 
 werp. 
 Spain: 
 
 J. Surra y Rull, Commissioner of the Mint. 
 
 J. Sanchez de Toca, Member of the House of Representatives. 
 
 G. J. de Osma, Member of the House of Representatives. 
 United States: 
 
 Edwin H. Terrell, Minister to Belgium. 
 
 William B. Allison. Senator. 
 
 John P. Jones, Senator. 
 
 James B. McCreary, Member of Congress. 
 
 Henry W. Cannon, President of the Chase National Bank, 
 New York. 
 
 E. Benjamin Andrews, President of Brown University, 
 
 Providence. 
 France: 
 
 Tirard, ex-Minister of Finance. 
 
 Liron d'Airoles. Councillor of State, Director of the Adminis- 
 trations of Coins and Medals. 
 
 Foville. Chief of the Bureau of Statistics and Legislation 
 
 in the Ministry of Finance. 
 Great Britain: 
 
 Sir Charles Fremantle, Deputy Master of the Mint. 
 
 Sir C. Rivers Wilson, Comptroller-General of the Public- 
 Debt Office. 
 
 Sir William Houldsworth, Manchester Manufacturer. 
 
 Alfred de Rothschild. Banker and Director of the Bank of 
 England. 
 
 Bertram Currie. 
 Greece: 
 
 P. Mulle, Consul-General at Brussels.
 
 378 THE CONFERENCE OP 1892 
 
 British India: 
 
 Gen. Strachey. 
 
 Sir Guilford L. Molesworth. 
 
 Italy: 
 
 Baron de Renzis, Minister to Belgium. 
 
 Simonelli, Deputy. 
 
 Zeppa, Deputy. 
 Mexico: 
 
 Don Antonio de Mier y Cells. 
 
 Don Joaquin D. Casasus, Deputy. 
 
 Gen. Francisco Z. Mena* 
 Norway: 
 
 Hagbard Berner, Director of the Mortgage Bank of Norway. 
 The Netherlands: 
 
 Van den Berg, President of the Netherlands Bank. 
 
 Boissevain, Member of the Statistical Institute of the 
 
 Netherlands. 
 Portugal : 
 
 D'Antas, Minister to Belgium. 
 Rovmania: 
 
 Bengesco, Minister to Belgium. 
 Russia: 
 
 Prince Ouroussoff, Minister to Belgium. 
 
 A. Raffalovich, Councillor of State, Agent of the Imperial 
 
 Finance Ministry at Paris. 
 Sweden : 
 
 Dr. Hans Forssell, ex-Minister of Finance. 
 Switzerland: 
 
 Charles E. Lardy, Minister at Paris. 
 
 Alphonse Rivier, Consul-General in Belgium. 
 
 Conrad Cramer-Frey, National Councillor. 
 Turkey: 
 
 Etienne Caratheodory Effendi, Minister to Belgium. 
 
 Allard, Consul-General at Brussels. 
 
 Beernaert, the Belgian premier, opened, the conference 
 with an address of welcome, and some general statements on 
 the monetary situation. Montefiore Levi, of Belgium, was 
 chosen president, and Minister Terrell, of the United States, 
 vice-president. In his speech on taking the chair, Levi said 
 that, whatever might be the result of the deliberations, the 
 conference would have it at heart to investigate the possibility 
 of remedying the condition of affairs of which none mistook the 
 gravity. At Senator Allison's suggestion, the conference then 
 adjourned for three days, as the delegates of the United States 
 wished to consult as to the propositions they should submit 
 for consideration.
 
 AMERICAN DELEGATES ADOPT A QUEER COURSE 379 
 
 The plan they agreed to present was unique. In the con- 
 sideration of means for a larger use of silver, it is obvious that 
 international free coinage should come first if at all; if an 
 agreement for the full use of silver became impossible, the 
 next step, naturally, would be to consider means for the largest 
 use short of free coinage, and so on till the largest use possible 
 was found. Instead of this, the American delegates asked for 
 the consideration of plans for a limited use first. 
 
 It is difficult to reconcile this course with the instructions 
 given by the Secretary of State on November 10. " It is the 
 opinion of the President, and, as he believes, of the people of 
 the United States, with singular unanimity," said the Secre- 
 tary, " that a full use of silver as a coined metal, at a ratio to 
 gold to be fixed by an agreement between the great commer- 
 cial nations of the world, would very highly promote the pros- 
 perity of all the people of all the countries of the world. For 
 this reason your first and most important duty will be to secure, 
 if possible, an agreement between the chief commercial coun- 
 tries of the world looking to international bimetallism that 
 is, the unlimited coinage of gold and silver into money of full 
 debt-paying power at a fixed ratio in coinage common to all 
 the agreeing powers. . . . Failing to secure international 
 bimetallism, the next important duty will be to secure, if possi- 
 ble, some action upon the part of European countries looking 
 to a larger use of silver as currency, in order to put an end to 
 the further depreciation of that metal. 
 
 The delegates, by stipulating for the consideration of plans 
 which the government rated as secondary, seemed to admit at 
 once the impossibility of securing bimetallism, though they 
 evidently had no such intention. 
 
 A possible explanation of this inverted course of action, 
 contrary to the instructions of their government, is that they 
 were satisfied an agreement would be impossible on any 
 plan for limited coinage or purchases, and that the conference
 
 380 THE CONFERENCE OF 1S92 
 
 would, in due time, arrive at the point where it must take bi- 
 metallism or nothing. They seemed to feel confident that 
 England was too deeply concerned to allow the conference to 
 adjourn without result, and that, if the United States refused 
 to accept anything short of bimetallism, England would event- 
 ually yield. If this were the motive for the programme, it did 
 not result as expected. 
 
 At the opening of the session on the 25th, Senator Allison 
 presented printed copies of the programme and statement, 
 which were as follows : 
 
 " It is generally admitted that the very large depreciation in 
 silver, as compared with gold, during the last twenty years, and 
 the frequent and violent fluctuations in the gold price of silver in- 
 cident thereto, have been injurious to the commercial and other 
 economic interests of all civilized countries, and have caused, and 
 are causing, serious evils and inconveniences to trade, the full ex- 
 tent of which cannot yet be measured. 
 
 " It is the opinion of the people of the United States, with singu- 
 lar unanimity, that the establishment of some fixity of value be- 
 tween gold and silver and the full use of silver as a coin metal, upon 
 a ratio to gold to be fixed by an agreement between the great com- 
 mercial nations of the world, would very greatly promote the pros- 
 perity of all classes of people. They are not unaware, however, 
 of the fact that public opinion in some of the other countries whose 
 co-operation in a successful movement for such an agreement is 
 most desirable may not fully accord with the views entertained in 
 the United States as to the practicability of such an agreement. 
 They believe, however, that a sentiment for a larger use of silver 
 as a money metal has been steadily growing throughout the world, 
 and that the time is propitioiis for holding an international con- 
 ference to consider the subject. The government of the United 
 States, while frankly disclosing its own views as to the proper 
 remedy to be applied, did not wish to impose any conditions that 
 would embarrass any government that might be willing to confer 
 upon the most advantageous relation of silver to the coinage of the 
 world. 
 
 " For these reasons the government of the United States pro- 
 posed a convention of the powers for the purpose of conferring as to 
 what measures, if any, can be taken to increase the use of silver 
 as money. 
 
 " In conformity to the general purpose of this conference, the 
 delegates of the United States offer the following resolution: 
 
 " ' That, in the opinion of this conference, it is desirable that 
 some measures should be found for increasing the use of silver in 
 the currency systems of the nations.' 
 
 " In presenting, as requested, a further programme to be laid 
 before the conference, the delegates of the United States consider 
 It to be due to the other nations here represented that an opportunity
 
 THE PROPOSITIONS OP THE UNITED STATES 381 
 
 should bo afforded them to consider plans for the enlarged use of 
 silver us money other than one favored by the United States. It is 
 our desire and expectation that the powers represented at this con- 
 ference, or some of their delegates, should submit proposals looking 
 to this end; and we desire that these proposals should have prece- 
 dence in the discussion. In addition to any plans of the kind which 
 may be presented, we submit for discussion the following, which 
 have been suggested by recognized authorities. At the same time, 
 we submit the general plan of international bimetallism which is 
 favored by the United States: 
 
 " 1. The plan of M. Moritz Levy, proposed to the monetary 
 conference of 1881. 
 
 " II. The plan of the late distinguished A. Soetbeer. 
 
 " Lastly, we present the plan favored by ourselves as delegates 
 of the United States of America: 
 
 " 1. That the re-establishment and maintenance of a fixed 
 parity between gold and silver, and the continued use of both as 
 coined money of full debt-paying power, would be productive of im- 
 portant benefits to the world. 
 
 " 2. That these ends can be accomplished by removing the 
 legal restrictions which now exist on the coinage of silver into full 
 legal-tender money, and restoring, by international agreement, the 
 parity of value between the metals which existed prior to 1873, at 
 such ratio as may be decided upon by this conference. 
 
 " 3. That the essential provisions of such an international ar- 
 rangement should be: 
 
 " (a) Unrestricted coinage of both gold and silver into money of 
 full debt-paying power. 
 
 " (6) Fixing the ratio in coinage between the two metals. 
 
 " (c) Establishing a uniform charge (if anj T ) to the public for the 
 manufacture of gold and silver coins." 
 
 In submitting this programme Senator Allison said that 
 it would have been difficult for his delegation to prepare a 
 proposition for the enlarged use of silver among the nations, 
 limited as to coinage, which could be answered by yes or no, 
 for they were not sufficiently familiar with the political policy 
 of the states of Europe as regards their autonomy and methods 
 to enable them to formulate a definite project necessarily so 
 complex in its nature. It was their desire, therefore, that the 
 European delegates should feel free to present plans for the 
 consideration of the conference, while the United States dele- 
 gates confined themselves to giving in detail the plan which 
 they favored. He then offered for immediate consideration 
 the resolution that, in the opinion of the conference, it 
 was desirable to find some measures for increasing the use of
 
 382 THE CONFERENCE OF 1892 
 
 silver among the nations a resolution which merely restated 
 the terms under which the conference had convened. 
 
 England was the first to come forward. Speaking in the 
 name of all the English delegates, Sir Rivers Wilson said, 
 they accepted the resolution as it stood, but felt that, as it was 
 only a recapitulation of the invitation which had already been 
 accepted, it need not be discussed. They were there to dis- 
 cuss plans for the increase of the circulation of silver, and 
 would, therefore, reserve for a later time their observations 
 upon the plan that might be submitted. "With that, Rothschild 
 laid on the table his plan, which undoubtedly had received 
 the sanction of the English government, and which, later, re- 
 ceived so much attention in the conference and outside. Spain, 
 Denmark, Mexico, and Holland joined with England in ac- 
 cepting unequivocally the abstract resolution of the United 
 States, but Germany, Austria-Hungary, and Russia practi- 
 cally doomed the conference to failure by stating that they 
 were prohibited by their instructions from debating or voting 
 upon any resolution whatever. As to Germany, Count Alven- 
 sleben said that, being satisfied with its monetary system, it had 
 no intention of modifying its basis. But his government did 
 not fail to recognize that the continual oscillation and the 
 considerable fall of silver were much to be regretted from an 
 economic point of view, and that it would be of great advan- 
 tage to the empire if the evils could be remedied in a lasting 
 manner, and for these reasons the invitation of the United 
 States to join in a conference had been accepted. Roumania, 
 Portugal, Greece, and Turkey expressed similar reservations 
 as to this particular resolution, though without any specific 
 instructions; indeed, the Turkish delegate seemed to have re- 
 ceived no instructions whatever, and he felt that he could not 
 express any opinion on money without first referring it to his 
 government. 
 
 The position of France was disappointing. She could not
 
 POSTPONEMENT OF ALLISON'S RESOLUTION 383 
 
 repeat too often, said Tirard, that, having one of the largest 
 holdings of the white metal, she was very much interested in 
 the question before the conference, " but," he added, " this 
 enormous quantity of silver which France already owns im- 
 poses upon her the greatest prudence, and she will not accept 
 any proposal except upon the condition that this stock of de- 
 preciated metal shall not be increased, or, supposing that it be 
 increased, that it shall not fail to offer very important com- 
 pensations." He was disappointed in the order of proceedings 
 the United States had laid down, for international bimetal- 
 lism, the principal question, that which was fundamental and 
 embraced everything, was left to the last, while subsidiary pro- 
 posals, which would naturally come up when it had been found 
 impossible to adopt the main proposal, were placed first. He 
 did not oppose the resolution, but would reserve complete 
 liberty of action as to plans for a limited increase in the use 
 of silver, so as in no way to prejudice the examination of the 
 broader proposal of bimetallism. Italy and Belgium took 
 practically the same position, though Switzerland held the 
 same attitude as in the conferences of 1878 and 1881 - 
 friendly to the gold standard, but subordinated to the Latin 
 Union. 
 
 Forssell, of Sweden, thought it would be premature to 
 vote upon the resolution of the United States before the means 
 by which the use of silver could be enlarged were known. He 
 proposed postponing it till after an examination of the plans 
 which might come before the conference, and the motion was 
 supported by Raffalovich, of Russia, and Boissevain, of Hol- 
 land. Senator Allison thereupon stated that he wwild not 
 insist upon an immediate vote, preferring to adopt the method 
 of procedure most agreeable to the assembly. The president, 
 therefore, proposed to drop the resolution and enter upon a con- 
 sideration of the plans, beginning with that of Rothschild, at 
 the next session, a proposal which was adopted; and, owing to
 
 384 THE CONFERENCE OF 1892 
 
 the course of later events, this initial resolution was not again 
 taken up, though there is scarcely a doubt that it would have 
 received a unanimous vote in the conference at any time in 
 its deliberations. 
 
 The plan submitted by Rothschild was accompanied by a 
 statement giving the text of a letter he had written to the 
 Gold and Silver Commission in 1886, insisting upon gold 
 monometallism as the only possible policy for England, and 
 pointing out the dangers to the Bank of England under a bime- 
 tallic system. These sentiments, Rothschild went on to say 
 in his statement to the conference, he still held, and he gave 
 some additional reasons for maintaining them. While ven- 
 turing to hope that he had conclusively shown the absolute 
 impossibility of bimetallism for England, " still," he said, " the 
 question arises whether it is not possible to extend the use of 
 silver generally, and thereby stop a further fall, the disastrous 
 consequences of which no one can foresee. I, therefore, take 
 the liberty of respectfully submitting a proposal for your kind 
 consideration. It would be presumptuous on my part to imag- 
 ine that I could suggest an absolute and lasting remedy, but I 
 think a palliative might be found in the following form : 
 
 " The American government are purchasers of silver to the ex- 
 tent of 54 millions of ounces yearly, and I would suggest that, on 
 condition these purchases were continued, the different European 
 powers should combine to make certain yearly purchases, say to the 
 extent of about 5,000,000 sterling annually, such purchases to be 
 continued over a period of five years at a price not exceeding 43 
 pence per ounce standard, but, if silver should rise above that price, 
 the purchases for the time being to be immediately suspended. The 
 details of such a scheme to form the subject of an international 
 agreement to be discussed by representatives of the different 
 powers." 
 
 He left it with the conference, if it should approve of the 
 plan, to supplement it in any way it saw fit before submitting it 
 to their governments, and he believed that, should the expres- 
 sion of the conference be unanimous, it would have great 
 weight in the ultimate settlement of the vexed question. He 
 hoped the United States would find it acceptable, and he could
 
 ROTHSCHILD ADVOCATES HIS PLAN 385 
 
 see no objection, so far as England was concerned, in further 
 making silver legal tender up to 5 instead of 2. He also 
 thought the proposal would be well received in India. " The 
 bulk of the population," he said, " would recognize that no 
 material alteration, if any, had been suggested, while the mer- 
 chants and bankers would know that the exchanges had been 
 given a stability which could not be disturbed for a period of 
 five years; for, if I am not misinformed, it is the instability in 
 the exchange which is the principal factor in the complaints 
 from India, rather than the depreciation in the value of the 
 rupee itself." But a material depreciation in the value of the 
 rupee would be a great calamity, he continued, affecting the 
 savings of hundreds of millions of people. If it were objected 
 that the plan proposed certain sacrifices on the part of other 
 countries not so immediately interested as England and India, 
 he could only say that what was right and best for the world 
 in general must eventually prove to be best for individual 
 interests. 
 
 Rothschild seemed to overlook the fact that this was the 
 very argument bimetallists had used in their vain appeals to 
 England in times past. The boot was on the other leg. Fif- 
 teen years before the warnings had come from bimetallists 
 and were regarded either with indifference or scorn by Eng- 
 land. It was Rothschild, an English delegate, ^ho, in 1892, 
 used these ominous words: " Gentlemen, I need hardly re- 
 mind you that the stock of silver in the world is estimated at 
 some thousands of millions, and if this conference were to 
 break up without arriving $t any definite result there would 
 be a depreciation in the value of that commodity which it 
 would be frightful to contemplate, and out of which a mone- 
 tary panic would ensue, the far-spreading effects of which it 
 would be impossible to foretell." 
 
 The underlying motives in the Rothschild plan do not seem 
 
 to have been fully appreciated at once by the conference, or, 
 25
 
 386 THE CONFERENCE OF 1892 
 
 at least, by the American delegates. In a general way, they 
 were the same as those prompting England's interest in the 
 conference of 1881 a desire to induce some one else to 
 undertake the burden of relieving England of embarrassments 
 in her Eastern commerce. In reality the Rothschild plan was 
 a scheme to bind the United States to continue its large pur- 
 chases of silver. Because of the fear and belief in India that 
 these purchases would be discontinued, a plan for the adoption 
 of the gold standard had been formed by Sir David Barbour 
 of the Indian government, and had been submitted to the 
 Indian Currency Commission, together with several petitions 
 for its acceptance. As we have seen also, it had been followed 
 by numerous protests from the producing classes against its 
 adoption. The English government and the commission con- 
 sidered it an uncertain and, perhaps, a dangerous step, yet 
 they thought that if silver should fall much lower the condi- 
 tions of trade would become well-nigh intolerable. The Indian 
 population was wedded to silver. There was the enormous 
 mass of 1,150,000,000 rupees in active circulation, to say 
 nothing of the fabulous hoards, and the gravest political trou- 
 bles might follow the demonetization and consequent depre- 
 ciation of such a treasure. The accumulation of gold in India 
 for the purposes of adopting a standard based on that metal 
 was to England almost unthinkable, when she had all she could 
 do to get and to keep gold enough for herself, and it was in this 
 state of the case that the Indian Currency Commission had sus- 
 pended its deliberations to see what could be done at the con- 
 ference. 
 
 If it could be known that the United States would continue 
 their purchases of silver, or, better still, be somehow inveigled 
 into free coinage by themselves, the English government would 
 not think of changing the Indian currency. But not knowing 
 this, and doubting whether our silver purchases would long 
 continue, it was proposed that, on condition that the United
 
 UNDERLYING MOTIVES FOR THE ROTHSCHILD PLAN 387 
 
 States would continue to purchase 54,000,000 ounces of silver 
 yearly at any price below 59 pence, Europe would buy 5,000,- 
 000 worth annually, or about half as much as the United States 
 were purchasing, provided the price of silver did not go above 
 43 pence per ounce. 
 
 There was only one handle to that jug. In other words, the 
 United States would be compelled to buy its monthly quota for 
 five years, adding over $200,000,000 to their legal-tender 
 circulation, while England and Europe would, under the cir- 
 cumstances, be compelled to buy very little, if any at all. The 
 reason for this is plain enough. It will be remembered that 
 at the time of the passage of the act of 1890 the price of 
 silver rose to 54 pence, and for some time before the confer- 
 ence had held fairly steady at 43 pence, though shortly before 
 it fell to about 39 pence. An international agreement, it was 
 thought, would have a similar and even greater effect in raising 
 the price ; the moment it became assured, under the Rothschild 
 plan, silver would easily rise from 39 to 43 pence, probably 
 higher, and England could then sit back and enjoy the situa- 
 tion, while the United States were doing all the purchasing. 
 
 If, after a time, the price should fall slightly below 43, 
 Europe, for England's benefit, would purchase a little, and 
 quickly bring the price back to the non-purchasing point, the 
 centre of the silver market being in London, where there 
 were exceptionable facilities for controlling matters under such 
 an arrangement. London bought silver extensively for India 
 anyhow, and if it became necessary to buy a little more to keep 
 the price above 43 pence, it could be done and sent to India, 
 the purchase of council bills being, perhaps, regulated ac- 
 cordingly. But there was reason to suppose that no purchases 
 to speak of would be necessary, because the fact that Europe 
 always stood ready to buy below 43 would naturally keep 
 silver from seriously falling below, if, indeed, it did not keep 
 it continuously above, that figure.
 
 388 THE CONFERENCE OF 1892 
 
 But why 43 pence ? To explain this a few details from the 
 plan of Sir David Barbour, then before the Indian Currency 
 Commission, are needed. In introducing his plan he said to 
 the English government that a gold currency was impossible 
 for India; whatever the standard, the people required small 
 coins for their small transactions, and would make trouble if 
 they could not get them. If the gold standard were intro- 
 duced, therefore, the bulk of the currency must still be silver, 
 and the only feasible plan was to stop the coinage of silver ex- 
 cept on government account, open the mints to gold, and make 
 the rupee worth, say, 16 pence in gold. Now, when silver is 43 
 pence per ounce English standard, the silver in a rupee is 
 worth just about 16 pence. 
 
 The Rothschild plan, therefore, had the further object of 
 fixing exchange on a stable basis between India and England, 
 instability being the chief cause of complaint, as Rothschild 
 said in his statement recently quoted, and fixing it at the figure 
 considered suitable for the introduction of a gold standard into 
 India. There was nothing in Rothschild's plan, as he drew it, 
 to guarantee that, at the end of the five years, India might not 
 adopt the gold standard with some of the gold that meanwhile 
 should be drawn out of Indian hiding places, or forced out of 
 the United States by the mass of treasury notes which our gov- 
 ernment would be bound, internationally, to keep increasing. 
 
 Such was the Rothschild scheme, or the scheme of the 
 English government, which the conference of 1892 first took 
 up for consideration. It appeared to some advisable to send 
 it to a committee for consideration, and, accordingly, when the 
 conference reassembled on November 28, Raffalovich, of 
 Russia, made a motion to that effect, expressing the belief 
 that the committee should consist of the experts in monetary 
 matters, and should observe secrecy in their deliberations till 
 the time of making their report,. It was supported by several 
 delegates, who, while asserting that the plan did not meet their
 
 A COMMITTEE TO CONSIDER PLANS 889 
 
 ideal, considered that it should be seriously considered, in view 
 of the object laid down in the invitation to the conference. It 
 was thought best to also refer the Levy and Soetbeer plans to 
 the committee, the appointment of which was left to the offi- 
 cers of the conference, who selected the following: Cannon 
 (United States), Casasus (Mexico), Cramer-Frey (Switzer- 
 land), Foville (France), Osma (Spain), Forssell (Sweden), 
 Fremantle (England), Molesworth (British India), Raffalo- 
 vich (Russia), Sainctelette (Belgium), Simonelli (Italy), Tiet- 
 gen (Denmark), and Van den Berg (Netherlands). The presi- 
 dent and secretary of the conference were also added to the 
 committee, which immediately began its work, and six meet- 
 ings were held before the next session of the conference on 
 December 2. 
 
 Its preliminary inquiry was directed towards these four 
 points: 
 
 1. The possibility of legislative measures to be taken by 
 the silver-producing countries, with a view to restrict or regu- 
 late the production of that metal. 
 
 2. The existing probability as to the future production of 
 silver in its two principal centres, namely, the United States 
 and Mexico. 
 
 3. The policy of the United States in regard to the pur- 
 chase of silver. 
 
 4. The policy of British India as to the coinage of silver. 
 As to the first question the American representative said 
 
 that it would be very difficult for the federal government to 
 tax the production of mines in which it had no direct interest, 
 and such a step was not at all probable. The Mexican delegate 
 said his government would dislike to increase the taxes on the 
 mines, as it would be harmful to the industry. He thought that 
 the silver production in Mexico had reached its maximum. 
 The tax had been successively reduced from 30 to 7-J per cent, 
 on the gross product, and, silver being the great article of Mexi-
 
 390 THE CONFERENCE OF 1892 
 
 can exportation, the government had every interest in not hin- 
 dering its sale. The United States delegate said that in his 
 opinion the maximum of production in his country had been 
 nearly reached, if it had not already been passed. As to silver 
 purchases, he said that the repeal of the act of 1890 had been 
 advised by the two political parties, and by the great bankers 
 of jSTew York, and if some arrangement were not made in this 
 conference it was probable that the purchases would be dis- 
 continued or decreased. 
 
 It will be understood that the statement of the Indian dele- 
 gate regarding the future policy of his country as to silver 
 coinage was of considerable importance. As long, he said, as 
 there was any hope of seeing an international agreement his 
 government would hesitate to modify its system; but, if this 
 conference should arrive at no conclusion, India would be 
 obliged to act, though the adoption of the gold standard would 
 be fraught with difficulties. The most satisfactory solution 
 for India would be the adoption of international bimetallism, 
 in which she would join the Latin Union and the United 
 States. If the conference adopted a plan rendering probable 
 the maintenance of a relative stability in the price of silver, it 
 was not likely that his government would close its mints to 
 silver even if the plan should meet with only partial, but 
 sufficiently important, adhesion; "the government of India, 
 without relinquishing its liberty of action, would be disposed 
 to buy silver, or to permit the coinage of a fixed quantity of 
 silver, not less than fifty million rupees a year, during the 
 entire duration of the agreement." 
 
 The committee then proceeded to examine the Eothschild 
 plan. From a theoretical point of view the principal argu- 
 ment advanced by the opponents of the plan was that the 
 intervention of a buyer, endeavoring to influence the market, 
 would be in conflict with the economic law which lays down 
 that the natural la\vs overpower, sooner or later, all attempts
 
 CONSIDERATION OF ROTHSCHILD'S PROPOSITION 391 
 
 of an artificial character. The partisans of the plan conceded 
 that an intervention, such as that proposed, would be danger- 
 ous unless it were limited in the length or importance of the 
 engagements to be undertaken. But with a duration of five 
 years, and with a maximum limit to the purchases to be made, 
 the moral effect, they said, should be considered. Monetary 
 policy in regard to silver would be settled for five years, and 
 besides this agreement of European nations, there would be 
 the certainty of seeing the United States, Mexico, and the 
 Indies remaining faithful to the existing line of conduct. 
 
 Touching upon practical ground, it was asked whether the 
 experiment had not already been made under more favorable 
 conditions. The coinage and purchases of the United States 
 were cited and attention called to the fact that they added 
 more to the annual demand than would be added on the part 
 of Europe by the Rothschild plan. Nevertheless, with the 
 exception of the rise in 1890 a rise resulting from the ebulli- 
 tion of speculation which thought its risks limited the price 
 of silver in London had not ceased to fall. It was urged that 
 Europe, without any preconcerted agreement, had absorbed in 
 the three years from 1889 to 1892 more than 300,000,000 
 francs for the needs of its coinage, and that, nevertheless, the 
 price had fallen. 
 
 In reply, Rothschild claimed that the experience of Amer- 
 ica was not conclusive, as, since 1878, the political opinion in 
 the United States had been essentially changeable, oscillating 
 between the prospect of free coinage and that of the cessation 
 of Treasury purchases, while Europe held aloof in an attitude 
 which w r as merely expectant, if not actively hostile to the white 
 metal, and, therefore, tending to discredit it still further. The 
 suggested experiment would, he said, be made in entirely differ- 
 ent conditions, since it would imply an accord of all united 
 interests. It was true that the European countries which 
 would become purchasers of the metal were not all in an iden-
 
 392 THE CONFERENCE OF 1892 
 
 tical situation. There were some which, could easily add each 
 year a certain quantity of silver to their circulation, but there 
 were others which already had a more than sufficient stock of 
 white metal. For the latter a certain compensation for possi- 
 ble sacrifices might be found in the stability of its value, in the 
 arrest of its fall, and, perhaps, also in the conditions of greater 
 security in international trade, and in the greater facility of ex- 
 changes. 
 
 In the course of the committee's discussion it became ap- 
 parent that the United States would only consent, if at all, to 
 such an agreement with Europe by being assured that the 
 newly bought silver would be used as money. There was con- 
 siderable difference of opinion as to how the silver should be 
 purchased and as to the quantity. The United States delegate 
 was quick to point out the unfairness of expecting his govern- 
 ment to purchase so much more heavily than all Europe to- 
 gether at the market price, whereas Europe was never to pay 
 more than 43 pence per ounce; but the European delegates 
 were in no mood to obligate their governments to purchase any 
 greater quantity than absolutely necessary, though the amount 
 was finally arranged provisionally at 30,000,000 ounces, or a 
 little more than Rothschild had originally suggested. As 
 finally modified by the committee the proposal was as follows : 
 
 " 1. The European states which agree upon the basis of this 
 proposal will buy each year 30.000,000 ounces of silver, on condi- 
 tion that the United States agree to continue their present pur- 
 chases, and that unlimited free coinage be maintained in British 
 India and Mexico. 
 
 " 2. The proportion of the purchase to be made by each country 
 will be determined by agreement between them. 
 
 " 3. The purchases will be made at will and in the manner pre- 
 ferred by each government. 
 
 " 4. These amounts of silver will be devoted in each country 
 to the monetary uses authorized by the legislation of that state; at 
 the will of each government, the silver will be either coined or made 
 the guarantee for the issue of ordinary or special notes. 
 
 " 5. The arrangement will be made for five years. The obliga- 
 tory purchase of silver will be suspended should the metal reach, in 
 the London market, a price determined by agreement of the govern- 
 ments. The purchases may be resumed if the delegates of the dif-
 
 THE SOETBEER PLAN 393 
 
 fereut countries interested should agree upon the fixing of a new 
 limit of price. They should be resumed ill any case if the price 
 falls below the original limit." 
 
 The Soetbeer plan appeared to the committee too compli- 
 cated to offer a practical basis for an agreement. The great 
 German monetary expert, who had been one of the leading in- 
 tellectual forces in the accomplishment of the monetary re- 
 form of his country, through his investigations in later years, 
 became fully impressed with the difficulties raised by the scar- 
 city of gold, and shortly before his death, when bimetallism ap- 
 peared to be making great headway in the German empire, 
 he published a plan for an international agreement which had 
 for its basis the acknowledgment of a fixed weight of pure gold 
 as a universal and sole foundation and normal measure of cur- 
 rency, and the maintenance in the several states of the existing 
 gold currency, subject to an agreement that in the future no 
 gold coins should be issued containing less gold than the 20- 
 franc piece, and that all previously coined pieces of less value 
 should be placed out of circulation within ten years. It pro- 
 vided, further, for the redemption of all bank notes and other 
 paper currency tokens of a value less than 20 francs within 
 ten years, and the obligation not to issue any currency tokens 
 of less denomination based on gold; the redemption within 
 fifteen years of all previously coined silver of a higher nominal 
 value than 10 per cent, of the value of the future lowest gold 
 coin, the minting of all larger silver coins to be at the ratio 
 of 20 to 1 and only on government account. Each government 
 would, however, be obligated to accept at its public treasuries 
 these " major " silver coins to any amount, and private persons 
 to the amount of three times the full value of the lowest gold 
 coin. There were provisions, also, for the issue of certificates 
 against these coins. It was, in short, a plan for a general gold 
 standard with a larger use of silver at the ratio of 20 to 1 ; the 
 ideal, under existing circumstances, of the theoretical gold 
 monometallism It involved extensive recoinage, and many
 
 394 THE CONFERENCE OF 1892 
 
 problems which practical men would not think of facing, at 
 least to leave silver where it already was, in a subsidiary posi- 
 tion. 
 
 The plan of Moritz Levy, already described in the chapter 
 devoted to the conference of 1881, was much simpler, and re- 
 ceived considerable attention from the committee. Objection 
 was made, however, that the cost of recoinage would be too 
 great, that the withdrawal of small gold pieces would be un- 
 popular in some states, and the difficulty of withdrawing small 
 notes great in many states. The committee finally decided to 
 submit the proposal to the conference in this shape : 
 
 I. The withdrawal from circulation within a period of 
 - of gold coins containing a weight of less than 5.806 
 
 grains of fine gold (20-franc pieces). 
 
 II. The withdrawal of notes of less value than the coin of 
 20 francs or its equivalent, an exception being made of notes 
 representing a deposit of silver. 
 
 A decided majority of the committee preferred the Levy 
 plan to Rothschild's, but the British delegate said he could not 
 recommend it to his government unless it were joined with 
 some policy like that of Rothschild, and an attempt was made, 
 therefore, to modify the latter plan by the use of some of the 
 provisions of the Levy scheme ; but the representatives of the 
 Latin Union were plainly determined that their governments 
 should purchase no more silver, and would not, therefore, agree 
 to the principle of the Rothschild proposal ; they even went so 
 far as to offer a formal motion that if such a plan were adopted 
 by the conference they could not recommend it at home, and 
 it passed the committee by seven votes against six, the repre- 
 sentatives of Sweden, Denmark, and Russia joining those of 
 the Latin Union to support it. Two of the six who thought 
 well enough of the plan to agree to recommend it to their 
 governments were, of course, Fremantle, of England, and 
 Molesworth, of India. The others were Cannon, of the United
 
 CONSIDERATION OF THE LEVY PLAN 395 
 
 States, Van den Berg, of the Netherlands, Casasus, of Mexico, 
 and Osma, of Spain. The position taken by France is one of 
 the curiosities of this conference. In 1881 she was ready and 
 eager to enter into an agreement to coin silver without limit; 
 in 1892 she would enter into no agreement that would require 
 her to coin any at all. But her delegates were willing to rec- 
 ommend to their government the Levy plan, which she had 
 barely noticed when it was presented in 1881, and which was 
 scorned by the bimetallists then as a half-measure. A large ma- 
 jority of the committee of inquiry favoring the Levy plan, it 
 accordingly came before the conference when it re-assembled 
 on December 2 as the only one affording any hopes of prac- 
 tical results. 
 
 When the debate upon the report was opened, Boissevain, 
 of the Netherlands, said that it left the conference face to 
 face with the last proposals of the United States, international 
 bimetallism. The Rothschild plan had been improved, but 
 the majority of the committee could not recommend it to their 
 governments. The Levy plan was left, to be sure, " but," asked 
 Boissevain, " is there any one so bold as to flatter himself that 
 measures such as these could remedy the situation in a really 
 efficacious manner? I believe, gentlemen, that we must admit 
 that just as the conference of 1881 failed to find the means of 
 overcoming the difficulties of the situation by the measures 
 which it had in view at the time of its adjournment, so we 
 have been now vainly ensnared by the hope that we should 
 find in palliatives the means of arriving at an understanding 
 between bimetallists and monometallists, which would satisfy, 
 at least, the most urgent needs of the present time." 
 
 The delegates seemed to assume that the committee had 
 done all with the Rothschild plan that could be done; regrets 
 were expressed that it could not have been modified into a 
 form promising practical results, but, instead of attempting 
 to do what the committee had not done, the conference took
 
 396 THE CONFERENCE OF 1892 
 
 it as it was, and so, of course, it amounted to nothing. General 
 Strachey, after reviewing the situation in India, said that its 
 delegates would not be able to associate themselves with any 
 proposal unless of a distinctly practical character, and that 
 would exclude all measures which failed to receive the support 
 of enough countries of financial importance to give reasonable 
 assurance of their becoming really effective. For this reason 
 he feared it would be impossible for him to recommend to his 
 government, as he had hoped he might, the proposal of Roths- 
 child. He wished the delegates could look more favorably 
 upon it. 
 
 The bimetallic delegate from ^Belgium, Allard, severely 
 criticised the conclusions which Rothschild had advanced in 
 behalf of the gold standard for England, quoted many emi- 
 nent Englishmen to show that the system had been in many 
 ways disastrous to their country, reminded Rothschild that the 
 monometallic Bank of England, of which he was a director, 
 had been compelled to appeal for the third time to the bimetal- 
 lic Bank of France to be saved from a crisis, and said that the 
 key to the unfortunate situation was in England, and her 
 delegates should turn to their government and endeavor to ob- 
 tain better terms than Rothschild had offered, and which he 
 considered would be entirely inadequate for the existing condi- 
 tion of things. He had no faith in silver purchases anyway. 
 If a terrible monetary panic should follow a further and sudden 
 fall of silver due to the breaking up of the conference without 
 arriving at any definite result, as Rothschild had predicted in 
 urging his plan, it would appear first at the doors of the Bank 
 of England, and it was, therefore, for England to come for- 
 ward with some proposition that would effect a real remedy. 
 
 Bertram Currie represented the stanch and complacent 
 gold monometallists of England. He held that there was 
 enough gold in the world, and that matters would arrange 
 themselves if they were allowed to take their own course, un-
 
 THE CONFERENCE IN AN ABSURD POSITION 397 
 
 obstructed by artificial devices, and if the nations kept their 
 finances in sound condition, the real desideratum being the 
 maintenance of a surplus of revenue over expenditure. Such 
 a surplus, he claimed, would command gold, and if any remedy 
 were needed, it was a gold standard even without a gold cur- 
 rency. 
 
 When the debate had proceeded thus far, Senator Allison 
 asked that the conference adjourn till the 6th, as the delegates 
 of the United States had not been able to make themselves 
 thoroughly acquainted with the report of the committee, and 
 as the debate had taken a wide range as to principles which 
 they would be ready to discuss if the conference considered 
 that it had arrived at that point where the consideration of 
 subsidiary proposals gave promise of no results. They had 
 asked for the consideration of these plans first to ascertain the 
 views of the different states, and to learn how far they would 
 go in the enlarged use of silver, in case they would not adopt 
 the plan of general bimetallism. The wish of Senator Allison 
 was acceded to, but one cannot fail to notice the curious, al- 
 most ridiculous, position in which the conference appeared to 
 be placed. It had been found that some of the nations would 
 not go so far as the Rothschild plan implied in the use of silver, 
 and yet it was proposed to enter as a last resort upon the consid- 
 eration of a plan to go further. In reality, however, the discus- 
 sion of bimetallism was in the nature of a pastime. Other sub- 
 sidiary devices had been submitted, and the committee of in- 
 quiry had still to report on these. 
 
 One feature of the declaration of the Mexican delegates 
 made at the fourth session deserves notice. Their government 
 did not appear in the role of a supplicant for relief; indeed, 
 they implied that Europe was most interested in preventing 
 the decline in the price of silver, although Mexico was one of 
 the large producers, and though silver had been for centuries 
 her chief article of export. The explanation of this may be
 
 398 THE CONFERENCE OF 1892 
 
 found in the following statement taken from their declara- 
 tion: 
 
 " The depreciation of silver as it has appeared to foreign coun- 
 tries for in our own country values have not perceptibly changed 
 has produced an actual premium on exportation. Articles which 
 were not exported formerly are sold now in the markets of Europe 
 and the United States at a loss of 8, 10, or 15 per cent, on the cost 
 of their production and the expenses incurred, because compensa- 
 tion is found in the gain in exchange of 25 or 30 per cent., corres- 
 ponding to the depreciation of silver, and for this reason the export 
 of articles, other than silver, has risen from $6,000,000, in 1873, to 
 $27,000,000, in 1891. In view of these results we have reason to be- 
 lieve that, after a few years, we shall be able to pay the value of 
 our foreign imports in produce of the country and in raw material, 
 and, perhaps, even more than this; and that our silver, of which 
 the present production is 40,000,000 piasters a year, will disappear 
 from the European markets." 
 
 At the beginning of the fifth session, Sir Rivers Wilson 
 stated the position of Sir Charles Fremantle and himself. The 
 peculiar thing about the British delegation in this conference 
 was that it ran the whole gamut of monetary science. Currie 
 was a monometallist who could see no evils in the situation and 
 conceived the gold standard to be the best system for all na- 
 tions, while, on the other extreme, there was Sir "William 
 Houldsworth, who accepted all the principles and arguments 
 of bimetallism and desired its general introduction. Between 
 them were Wilson, Fremantle, and Rothschild, all of whom 
 held that the gold standard was necessary to their country, but 
 they admitted that there were serious evils in the existing 
 situation, and were either willing or anxious that some practi- 
 cal plan of relief should be devised without any sacrifice of 
 their monometallic principles. It was not enough, said Wil- 
 son, that the plan should be defensible in principle, though 
 that was necessary; it must meet with such a preponderance of 
 support as would justify them in recommending it to their 
 government for consideration. The Rothschild plan had not 
 met with that support, and it would, therefore, be useless for 
 them to discuss it, and it would be equally useless to discuss the 
 Levy plan, for their government would be unwilling to submit
 
 ROTHSCHILD WITHDRAWS HIS PLAN 399 
 
 to the inconvenience of so extensive a withdrawal of its gold 
 coinage unless it were coupled with features which would 
 plainly make it for their advantage to do so. England must, 
 therefore, await other plans. 
 
 Although Cannon had, by his vote in the committee, prac- 
 tically declared his willingness to recommend the Rothschild 
 plan to the government of the United States, others in our 
 delegation were evidently unwilling to go so far. McCreary 
 followed Wilson with a speech in which he said that he could 
 not support the plan, giving his reasons very plainly and pre- 
 dicting that, if the conference came to no result, the silver-pur- 
 chase act would be quickly repealed by Congress. Upon this 
 Rothschild withdrew his plan from the conference with the 
 statement that, although he had not shown it to the delegates of 
 the United States beforehand, he had believed it would be sat- 
 isfactory to them. 
 
 Xo other palliative remained to be discussed except that of 
 Levy, and the debate which followed treated less of its features 
 than of general principles. Van den Berg, of Holland, one of 
 the ablest and most experienced financiers in the conference, 
 spoke earnestly for bimetallism, and was followed by Sir 
 "William Houldsworth, who attacked the arguments of his col- 
 league, Bertram Currie, and said that he considered the plan of 
 his other colleague, Rothschild, quite inadequate as a perma- 
 nent remedy. He was not, however, disposed to turn his back 
 on palliatives, provided they were not accepted as remedies, but 
 were applied for a short time to give the opportunity to work 
 out a complete and enduring solution. Eighteen months would 
 be long enough, in his opinion, to try a plan like Rothschild's, 
 and then, if the world were not wise enough to adopt a scientific 
 monetary system, he believed the logic of stern events would in 
 time force its adoption. Sir Guilford Molesworth, of British 
 India, made an exceedingly able speech on the general situa- 
 tion in its relation to India, and said that the only satisfactory
 
 400 THE CONFERENCE OF 1892 
 
 solution for his government under the circumstances would be 
 a bimetallic agreement between India, the Latin Union, and 
 the United States, and he believed that it would be strong 
 enough to maintain any ratio that might be fixed. He could 
 not disguise the fact, he said, that the adoption by India of the 
 gold standard would be fraught with difficulties, but he be- 
 lieved it would be more disastrous to the gold-using countries of 
 Europe than to India. Like Houldsworth, he ridiculed the 
 assertions of Currie, that the gold standard had produced no 
 troubles for England, but had rather built up her commerce 
 and given her a financial supremacy, and he cited many his- 
 torical instances to prove the contrary to be true. 
 
 The general discussion of bimetallism was continued to the 
 tenth and last session, while the committee were considering 
 other plans which had been submitted. It was an exceedingly 
 able and exhaustive debate, the chief participants being Sena- 
 tor Jones, whose comprehensive review of the subject occupied 
 much of two sessions, Houldsworth, of England, Molesworth, 
 of British India, Boissevain and Van den Berg, of Holland, 
 Allard and Weber, of Belgium, Forssell, of Sweden, and 
 Tirard, of France. The chief addresses on the gold side were 
 those of Weber and Forssell. The former endeavored espe- 
 cially to meet the arguments of those who claimed with un- 
 abated persistence that the fall of prices was due entirely to 
 the scarcity of metallic money. He held that the forced cir- 
 culation of silver would be iniquitous from whatever stand- 
 point regarded, and that, in seeking for industrial and com- 
 mercial expansion by international means, the nations must 
 look to the custom-houses and not to the mint. No one, he said, 
 could calculate the loss that would accrue to the next genera- 
 tion from an international agreement on bimetallism. Who 
 would dare to prophesy the condition of international affairs, 
 the condition of Europe and of the world, when the term of the 
 international monetary convention ran out? Which nations
 
 THE ARGUMENT OP THE MONOMETALLISTS 401 
 
 would have an interest in demanding from the others the re- 
 demption of the coins bearing their distinctive stamp? After 
 twenty or twenty-five years, the probable period of such an 
 arrangement, who would be the creditors, and who the debt- 
 ors ? Xo one, he said, could tell ; but they could, in his opinion, 
 be sure of one thing, that there would be a surfeit of money, a 
 formidable inflation of silver currency, and that it, would have 
 all been brought about for the sole purpose of digging up silver 
 in America and elsewhere, and bringing it to Europe to bury 
 it again in the vaults of the banks of issue. 
 
 The proposal for an international bimetallic agreement, 
 said Forssell, was audacious far above the vulgar prejudices of 
 the time. " Everybody distrusts silver coin, of which there is 
 evidently more than is necessary; everybody, therefore, seeks 
 to keep his gold, which seems scarcely sufficient for its needs; 
 and it is at this moment that everybody is asked to agree by 
 international contract to coin this disliked silver in unlimited 
 quantities while remaining free to get and to keep gold, each 
 as best he may." He claimed that the actual ratio between 
 the two metals had never, and nowhere, been invariably in 
 accord with the legal ratio, and that, after such an experience 
 the resort to the hypothetical project of international bimetal- 
 lism was an attack on reason. The problem of a union suffi- 
 cient to guarantee against a premium on gold was like the 
 question " What length, what breadth, and what capacity 
 should be given in order to best contain a certain quantity of 
 liquid in a hogshead of which there is no possibility of stopping 
 the bunghole?" In conclusion he said: 
 
 " The states of the Latin Union, and especially Belgium, can tell 
 us something of the practical side of the question. Those states 
 entered one fine day full of international confidence under the 
 magnificent arches of the bimetallic system supported by pillars of 
 gold and silver ranged in a pre-established harmony of 15^. But 
 the harmony was disturbed, silver fell, the white pillars were trans- 
 formed into walls which barred the outlet, and they were im- 
 prisoned. In prison, tempers are easily soured, and the Latin Union 
 states no longer bless the treaty of 18G5. How can it be desired that 
 26
 
 402 THE CONFERENCE OF 1893 
 
 the European states, with eyes opened by these experiences, should 
 willingly enter into an international engagement from which there 
 would be no retreat? If the conference of Brussels contributes to 
 establish and fortify the conviction, which is already very general, 
 that an international agreement for the free and unlimited coinage 
 of silver as full legal-tender money Is not orly rejected for the 
 moment, but inadmissible for the future, it will have reached a 
 very important result. It will then have destroyed the vain and 
 sterile illusions which have already too long troubled men's minds 
 and turned them from the reality of facts towards the dream of an 
 unrealizable Utopia." 
 
 The bimetallic arguments were stated with, equal force 
 and ability. It was held that bimetallism was in scientific ac- 
 cord with the law of supply and demand, and that a league of 
 strong nations could fix the relation of supply and demand it- 
 self; that prices had fallen because of the appreciation of gold, 
 and that there had really been no overproduction of silver. 
 The fact that monometallists no longer advocated the demone- 
 tization of silver everywhere they claimed to be a recognition 
 of the paucity of gold available for money, and they asserted 
 without contradiction that gold monometallism could not be 
 maintained permanently anywhere, unless it was everywhere, 
 for commerce would not always tolerate one money for the 
 East and another for the West. The conflict for gold, if not 
 paired with silver, would be irrepressible and more and more 
 bitter. 
 
 There was some disposition among the monometallists to 
 allege that bimetallism had strong aifinities for protection by 
 customs tariff, but the bimetallists claimed that some of the 
 strongest foes of bimetallism were protectionists and many of 
 its chief advocates free-traders. Only once in the debate was 
 the question as to what should be the fixed ratio between gold 
 and silver, in case of an international agreement, touched upon. 
 It was raised by Forssell, possibly in the belief that it would 
 engender a dispute between the advocates of bimetallism, and 
 thus prevent their rather severe charges against monometal- 
 lism. Senator Allison quickly set aside the question by saying 
 that while it was a fundamental one, it was the last to be con-
 
 REPORT UPON OTHER PLANS 403 
 
 sidered; the question of how many states would enter into an 
 agreement must naturally come first. If not enough states 
 were ready, the discussion of the ratio would be a waste of 
 time. He stated, however, that if the general opinion seemed 
 to be in favor of the adoption of the ratio of 15.50 to 1, he 
 thought his government would agree to it. 
 
 Curiously enough, the old question which was the motive 
 of the conference of 18 07 was suggested by one delegate, Ben- 
 gesco, of Roumania, though the suggestion fell flat. His 
 idea was that while an international agreement as to the mat- 
 ters presented by the United States appeared to be impossible, 
 one might be easily arranged on the optional coinage and ob- 
 ligatory circulation in each country of gold pieces equivalent to 
 25 francs. 
 
 Both before and during the debate on bimetallism the 
 British delegates had asserted that England could not adopt 
 such a system, and Germany and Austria practically stated 
 that they could not unless England did. The latter was really 
 the attitude of France also, though her delegates protested that 
 they were as friendly as ever to silver; but France had too 
 much to permit it to consider any proposition to enter into 
 an agreement to coin more unless under a general bimetallic 
 agreement. Tirard said that, if the Rothschild plan was to 
 be adopted, he had no doubt that France, which had so much 
 silver, would be expected by England, which had very little, 
 to buy the greater part of Europe's share. In this situation 
 it would have been useless for the United States delegates to 
 have urged a vote on the question of adopting bimetallism. 
 Xeither side seemed to wish it. Neither was there a vote upon 
 the Levy proposition. 
 
 At the tenth session the conference took up the report of 
 the committee on the six other plans which had in the mean- 
 time been submitted to its consideration. The first of these, 
 that of Tietgen, of Denmark, proposed the free coinage of
 
 404 THE CONFERENCE OF 1892 
 
 silver at a ratio to gold as near as possible to that of bullion in 
 the market, the coins to be full legal tender, and to circulate in- 
 ternationally, each state being bound to redeem its own in gold. 
 The possibility of establishing in the banks of issue by this 
 plan a sort of metallic credit upon foreign countries, which 
 might in times of crisis serve to some extent to protect the gold 
 reserve, very favorably impressed the committee, but the feat- 
 ure of recoinage of silver money was objectionable to some. 
 Tietgen withdrew this part of it, but, being compelled to re- 
 turn home, the plan was dropped. 
 
 Sir William Houldsworth presented a plan based upon a 
 project prepared by Huskisson in 1826, for the consideration 
 of the British government, and which, presupposing bimetal- 
 lism in one or more states, was intended to guarantee the suc- 
 cess of this through the adoption by other states of some means 
 short of bimetallism. The gold states would receive silver 
 bullion, issuing therefor certificates, each naming the gold 
 value of the silver at the date of deposit, circulating as legal 
 tender in all transactions, and redeemable each in the weight 
 of silver for which it was issued. If silver rose, the holder 
 would gain ; if it fell, he would lose. It was found that certain 
 countries would not enter into such an arrangement with this 
 legal-tender feature, fearing that if the bimetallic union should 
 break up, the notes would become depreciated; but Houlds- 
 worth considered the legal-tender feature essential to the plan, 
 and so the committee dropped that also. 
 
 Allard, of Belgium, proposed an international application 
 of the recommendation made by Secretary "VVindom in 1889, 
 a plan under which the governments, instead of the holders of 
 the certificates, would gain or lose from the fluctuations in the 
 price of silver. Allard proposed that the issuing states form 
 a group and bear the loss in common, in a proportion to be 
 determined, in case silver depreciated; but serious objections 
 were raised to it, and the committee regarded the efficiency of
 
 A PROROGATION DESIRED 405 
 
 the remedy as doubtful. Foville advocated international legis- 
 lation, favoring the practice of the deposit of silver bullion in 
 the mints and great banks with certificates of deposit or com- 
 mercial warrants, but not legal tender nor guaranteed by the 
 governments. Forssell, of Sweden, with the purpose of show- 
 ing the benefit that might be expected from an international 
 agreement for improving the conditions of gold circulation and 
 diminishing the frequent transfers of gold from one bank to 
 another, proposed the compact already in force between the 
 banks of Sweden, ISTorway, and Denmark. Each of these 
 banks has an account with each of the others, a check being 
 honored by the drawee bank even when the bank drawing it 
 happens to have no cash on deposit with the drawee. Levi and 
 Sainctelette proposed that mints and government banks should 
 receive " twin deposits," each consisting in a given amount of 
 gold and a given amount say, twenty times as much in 
 weight of silver, issuing for each such twin deposit a certifi- 
 cate redeemable only in the exact weight of gold and silver 
 deposited. The United States member of the committee ob- 
 jected to the various plans for silver warrants on the ground 
 that they would create floating stocks of metal without a mon- 
 etary outlet, and that they would be subject to speculation. 
 The committee decided to leave the questions raised by all 
 these proposals open for consideration and settlement in the 
 conference, so its whole report was really a mere exposition, 
 which at best could only serve as a basis for investigation by 
 the delegates or their governments. 
 
 But a. majority of the conference were not disposed to do 
 any more work at that time, the holidays being at hand. Most 
 of the delegates were uncertain as to the manner in which 
 their governments would regard the various propositions 
 offered. Some wished to reassemble early in January, but 
 more considered a longer recess desirable, to enable govern- 
 ments to consider fully the various measures placed before the
 
 406 THE CONFERENCE OP 1892 
 
 conference. Accordingly, at the tenth session Baron di Ren- 
 zis, of Italy, offered the following resolution : 
 
 " The International Monetary Conference, recognizing the great 
 value of the arguments which have been developed in the reports 
 presented and in the discussions at the meetings, and reserving its 
 liual judgment upon the subjects proposed for its examination, ex- 
 presses its gratitude to the government of the United States for 
 having furnished an opportunity for a fresh study of the present 
 condition of silver. 
 
 " The conference suspends its labors and decides, should the 
 governments approve, to meet again the 30th of May, 1893. It ex- 
 presses the hope that during the interval the careful study of the 
 documents submitted to the conference will have permitted the dis- 
 covery of an equitable basis for an agreement, which shall not in- 
 fringe in any way the fundamental principles of the monetary 
 policy of the different countries." 
 
 Baron di Renzis supported the motion in a speech in which 
 he predicted that definite results would follow a reconvening 
 of the conference after the delegates and their governments 
 had fully examined the plans which had been submitted. Sen- 
 ator Allison said that, as it had been quite generally admitted 
 that there were grave dangers in the situation, and as it 
 seemed important that something should materialize, he would 
 consider it wise to continue the deliberations, but a short ad- 
 journment, at least, seemed necessary, and he quite agreed 
 with the suggestion that it would be well under the circum- 
 stances to allow the different governments time for considera- 
 tion. The only opposition to the course came from the purely 
 monometallic wing of the British delegation. Bertram Currie 
 called attention to the fact that the conference of 1881 still 
 remained adjourned, and he asked what prospect the confer- 
 ence of 1892 would have of a speedier reunion. In three differ- 
 ent conferences the nations had exhausted their ingenuity in 
 devising plans for the increase of silver money, and he thought 
 the time had arrived when, as men of the world, or men of 
 business, they should recognize that the task was impossible, 
 that it was wiser, instead of postponing the decision, to declare 
 plainly to the advocates of bimetallism that their plan would 
 be no cure for the ills of which they complained, so that,
 
 DIVERSE OPINIONS IN THE ENGLISH DELEGATION 407 
 
 abandoning vain imaginings and illusive visions, which could 
 never become realities, they might turn their attention to some 
 possible alleviations of their distress. He considered that the 
 malady which affected them was political rather than financial. 
 Sir Rivers Wilson made a somewhat more moderate state- 
 ment in behalf of Fremantle, Rothschild, and himself, simply 
 expressing a doubt as to the advantages of a proposed adjourn- 
 ment. It was no secret, he said, that the English government 
 only entered upon the conference with hesitation, and it was 
 quite possible that it might appear to that government un- 
 necessary to renew the mission. If the meeting of the confer- 
 ence should take place at the date proposed, he thought it 
 could have no other purpose than the examination of a per- 
 fectly practical and explicit proposal from the government of 
 the United States. Sir William Houldsworth, speaking for 
 himself, denied that the British government accepted the in- 
 vitation to the conference with hesitation or reserve. " So far 
 from any reserves being placed upon us," he said, " our in- 
 structions seem to me of the freest possible kind. They even 
 went so far as to charge us to study with the greatest care any 
 plan that might be submitted for our consideration before com- 
 ing to the conclusion that matters must be left as they are." 
 Xor did he agree with the suggestion of his colleague that the 
 conference should not meet again unless to consider some def- 
 inite plan put forward by the United States. " I trust that by 
 next May," he said, " we shall have more light, and I think Mr. 
 Currie will be astonished in a very short time at the progress 
 which this question will make in England among the great 
 masses of the industrial and commercial classes. Of course, 
 the bankers of England and the government may remain ob- 
 stinate, but I do not think that the people of England will 
 quietly and patiently continue to suffer from the dangers and 
 difficulties which they are now enduring, or which certainly 
 will come upon them if nothing be done. The delegates from
 
 408 THE CONFERENCE OF 1892 
 
 British India strongly favored the adjournment to May; the 
 resolution passed, not even Currie voting against it, and with 
 the usual courtesies the delegates of the conference of 1892 
 separated never to reassemble. In the course of a month they 
 had held ten long sessions, considered as many different plans 
 for increasing the use of silver as money, redebated the ques- 
 tion of bimetallism, and taken not a single vote. The resolu- 
 tion which had been submitted by the delegates of the United 
 States, to the effect that a larger use of silver as money was de- 
 sirable, remained unacted upon among the papers of the con- 
 ference.
 
 CHAPTER IX 
 
 THE COURSE OF MONETARY EVENTS SINCE 1893 THE PRESENT AND THE 
 
 FUTURE 
 
 MAINLY because of his different social and political tradi- 
 tions and environment, the European habitually misappre- 
 hends the real strength and the saving qualities of popular 
 government in the United States. "We, on the other hand, 
 quite as commonly and as naturally misapprehend the peculi- 
 arities of European civilization. The rigidity of financial con- 
 servatism in England, for example, is underestimated by us, 
 and the elasticity manifested by public sentiment here, the 
 violent swings the political pendulum sometimes makes, is mis- 
 construed abroad, even by intelligent and acute Englishmen. 
 Seeing us for the moment in the rapids, they are led to think, 
 as did Carlyle thirty-five years ago, that we must consequently 
 " shoot Niagara to the bottom." The intelligent American 
 knows that the powers of his particular form of government 
 for his deliverance develop themselves in the rapids, and 
 that, the very forces which seem to threaten his destruction 
 finally co-operate to establish him on safer and higher ground 
 than he before held. His history will teach him this. 
 
 Expensive as some of the escapades of political feeling have 
 been in this country, they have had their compensations ulti- 
 mately; and a strong nation has been developed, a people 
 firmly bound together by a loyalty to themselves as a people 
 with a rich inheritance. Serious questions have gradually 
 worked themselves out, and a sounder policy has frequently 
 followed in the trail of apparently disastrous outbreaks of 
 political furor, fed and fattened by demagoguery. In view of
 
 410 THE PRESENT AND THE FUTURE 
 
 the European misapprehension of our political phenomena, it 
 is not strange that governments abroad have postponed action 
 in the face of their own urgent situation in the expectation that 
 the United States would, in a freak of indiscretion, assume 
 the whole, or a greater part, of the inconvenience of pulling 
 their chestnuts out of the fire. Of such a parentage was their 
 attitude of expectancy born. In the light of the history re- 
 lated in the preceding chapters, it remains simply to deal with 
 the series of facts characterizing the past five years, and which, 
 though important and striking, are so familiar to most readers 
 as to require only brief reference. 
 
 The conference of 1892 adjourned in the expectation of 
 reconvening five months later, because none of the govern- 
 ments were willing to let the matter drop. They were well 
 aware that the Silver Question had been brought to a fork in 
 the road, and that something important must soon happen. 
 Here they paused, each in its characteristic attitude of ex- 
 pectancy, England assuming to await some definite proposition 
 from the United States. But she realized that something must 
 be done for India unless the United States continued to pur- 
 chase silver or reopened their mints to it. No government 
 would have congratulated itself more sincerely than the Eng- 
 lish had an agreement for a larger use of silver been reached, 
 and it doubtless thought that the silver interest in the United 
 States was sufficiently strong to compel the government to, at 
 least, come forward the following May with a proposal that 
 would require England to do no more than her delegates had 
 shown a willingness to do ; and the almost continual agitation 
 for free silver in Congress and in the West kept English expec- 
 tancy alive. The deficits in the Indian budget, and the embar- 
 rassments of English merchants because of the uncertain rate 
 of. exchange, and the fact that the low price of silver gave 
 Indian merchants a marked advantage over them in valuable 
 Oriental markets would, they conceived, vanish like the mists
 
 CONDITIONS UNDER WHICH THE CONFERENCE ADJOURNED 41 1 
 
 of the morning if only the United States would by one of those 
 threatening sweeps of silver feeling provide from their enor- 
 mous resources a market for all the silver their mines produced 
 and that which, possibly, other nations would cheerfully, 
 under the circumstances, discard. 
 
 At that time, as the English statesmen well knew, the gov- 
 ernment of the United States, with a mass of silver in circula- 
 tion, faced a gold reserve scarcely above the point maintained 
 as necessary for the redemption of the " greenbacks," and this 
 balance was, in the absence of any premium device or rate of 
 discount, at the mercy of any one who desired gold for export 
 or hoarding. "Would the United States dare to discontinue 
 the purchase of silver, and, thus subjecting their silver circu- 
 lation to a serious depreciation, add to the burden resting upon 
 an unprotected reserve ? On the other hand, the United 
 States might with as much reason have asked, would England 
 dare to close the Indian mints which for years had absorbed 
 silver, thus subjecting an enormous and sometimes rebellious 
 population, habituated to silver as a legal tender, always 
 hoarding it as the main evidence of wealth, to the uncertainties 
 of an artificial and possibly inconvertible currency ? While 
 they were waiting, these questions were answered. The United 
 States became frightened over the gold reserve, and under- 
 took the repeal of the silver-purchase act ; England took steps 
 to close the Indian mints. 
 
 The conference adjourned during one of those periods 
 when the government of the United States seldom does any- 
 thing of importance the period between the election of a 
 new president and his inauguration ; and as the time of a new 
 president for three months after his inauguration is mainly oc- 
 cupied with the reception of office-seekers and their friends, we 
 may not be surprised that the adjourned conference and its 
 future prospects vanished from the minds of the people, and 
 occasioned no perceptible ripple in administrative affairs. The
 
 412 THE PRESENT AND THE FUTURE 
 
 report of the American delegates was submitted to Congress 
 in the latter part of February, 1893. In it they said: " It is 
 anticipated that the delegates upon the reassembling of the 
 conference will be able to state definitely the views of their 
 respective governments as to what plans are practicable to 
 > secure the greater use of silver as a part of the metallic money 
 of the world. The delegates of the United States express the 
 hope that the conference at the next session will be able to 
 adopt some practical method to secure this end. They are en- 
 couraged in this hope by the fact that in the later sessions of 
 the conference the general concensus of opinion was distinctly 
 more favorable to the objects which the conference had in view 
 than in the early sessions." The radical silver element in Con- 
 gress was rather pleased than otherwise over the failure, having 
 no faith in international conferences, and little use for any- 
 thing short of free coinage; they were too impatient to have 
 the United States undertake it alone to bother with other na- 
 tions. In the correspondence on the subject it appeared that 
 the other nations expected the United States to present a defi- 
 nite proposition when the conference reassembled ; but the new 
 administration was at first too engrossed in reversing the policy 
 of its predecessor in the Hawaiian Islands to consider the con- 
 ference, and the President asked for a postponement till No- 
 vember 30. So the date passed with hardly a mention on this 
 side of the water. The popular mind was absorbed in the mis- 
 sion of Mr. Blount to Honolulu, and the first manifestations of 
 an uneasiness in the business world. 
 
 The subject attracted more attention iji England. Soon 
 after the adjournment of the conference the Indian Currency 
 Commission resumed its hearings and continued them till the 
 latter part of February. The testimony taken is interesting 
 reading in the light of subsequent events, and furnished little 
 to warrant the conclusion that a " rupee vacuum " could be 
 created in India, and the rate of exchange thereby stiffened,
 
 REPORT OF THE INDIAN CURRENCY COMMISSION 413 
 
 as the Indian Currency Association proposed. The idea rested 
 largely on the economic theorem that money is made dearer 
 by decreasing its supply a theorem which sometimes fails 
 when the very process reduces the commercial value of the 
 metal of which the money is made. The majority of the wit- 
 nesses, who, from their experience in Indian affairs, were the 
 most competent to judge, gave various reasons why in their 
 opinion a gold standard would be a failure and even a disaster 
 in India. They feared the effects on the Indian population if 
 the plan of the Currency Association did what was promised 
 for it, and they had little faith in such artificial means as a 
 remedy for the government's predicament. 
 
 The members of the commission were evidently far from 
 hopeful or sanguine as to the plan. From the first of March 
 to the first of June they waited before formulating a report. 
 Meanwhile the bimetallic agitation went on in Lancashire and 
 other parts of Great Britain, while the Indian officials and the 
 Currency Association sent on appeals for action, if bimetal- 
 lism were impossible, or there were no hopes of the reassem- 
 bling of the conference. On the other hand, prominent asso- 
 ciations engaged in the Oriental trade continued to file protests 
 against the adoption of a gold standard for India. 
 
 The report of the commission is dated May 31, the day 
 after that fixed for the reconvening of the conference. It may 
 have been simply a coincidence, but there appears to be abun- 
 dant circumstantial evidence that the commission would have 
 preferred to have left matters as they were, had there been 
 any remaining prospect of an international agreement on such 
 terms as England had expressed a willingness to consider. 
 England would probably have yielded something more, rather 
 than try an experiment which the majority of the commission 
 evidently feared. 
 
 In the whole course of the long controversy, probably, 
 there has never been provided better material for a bimetallic
 
 414 THE PRESENT AND THE FUTURE 
 
 argument than is furnished by this report. Let us look at it a 
 moment from a bimetallic standpoint. The commission seemed 
 to fear that, if the mints were entirely closed to silver, ex- 
 change might rise above the fixed par of Is. 4:d., though the 
 commercial price of silver would fall ; that is, the price of silver 
 would fall because of the sudden stoppage in the commercial 
 demand, while the exchangeable value of the rupee might rise 
 to an uncertain height because the supply in India was cut off. 
 Here were silver coins which had possessed, according to the re- 
 port, a steady intrinsic and exchange value among 287,000,000 
 people, a population as great as all Europe, leaving out Russia, 
 and it was proposed to produce a sort of corner in these coins 
 in India, which, while lowering their intrinsic value, might, it 
 was feared, so raise the exchange value as to lead to a fall in 
 the price of Indian produce. In the hope of avoiding this pos- 
 sibility, the commission proposed that, while the mints were 
 closed to the public, the government should have the right of 
 coining rupees on its own account, if at any time exchange 
 seemed in danger of rising too high; that is, if the demand 
 of the people for rupees became so severe as to threaten a fall 
 in the price of their products. 
 
 After years of free mintage the whole per capita circula- 
 tion in India at that time, as given in official reports, was 5.35 
 rupees ($1.26). This was the circulation which, to raise ex- 
 change, it was proposed to monopolize. IS^ow observe the situ- 
 ation of the Indian government. In the report it is stated : 
 
 " The government have yearly to remit a very large sum to this 
 country [England] in discharge of their gold obligations. In 1873--74, 
 before the fall [of silver] commenced, the amount remitted was 13,- 
 285,678, which, at a rate of exchange of Is. 10.351<1, was represented 
 by Rx. 14,265,700 [tens of rupees]. During the last year (1892--93), 
 the amount remitted was 16,532,215. which, at the rate of exchange 
 of that year, viz.: Is. 2.985d., required a payment of Rx. 26.478,415. 
 If this could have been remitted at the exchange of 1873--74, it would 
 have needed only Rx. 17,751,920." 
 
 After making all allowances, " it is certain," say the com- 
 missioners, " that the government had actually to remit in
 
 THE REPORT FROM A BIMETALLIC STANDPOINT 415 
 
 1892-3 upwards of Rx. 8,700,000 more than if the exchange 
 had been at its former point." Proceeding now from a bimetal- 
 lic standpoint, it will be observed that, as the government ac- 
 quired its rupees principally by the taxation of the people with 
 whom the rupee had not materially changed in value, this in- 
 creased remittance meant an additional tax of over 50 per cent, 
 to pay the English creditor, not for more money invested, but 
 for the change that had come over the creditor's money for 
 the difference which had come between the money the In- 
 dian debtor acquired and the money the English creditor re- 
 quired. While the silver of the Indian was worth no more in 
 commodities in India than in 1873, the gold of the creditor 
 would buy much more in England his prices had fallen. 
 He had not only received regularly the annual interest on the 
 securities, but the principal had greatly enhanced in value 
 without his investing an additional penny. But this royal 
 commission of the creditor nation, in speaking of the possible 
 rise of the exchange value of the rupee, in case the govern- 
 ment had not the power of regulating the intensity of the pro- 
 posed vacuum in the legal tender of the debtors, says: " The 
 rise in exchange would be calculated to lead to a fall in the 
 price of Indian produce. And, if this were seen to follow, 
 and believed to be caused by the action of the government, 
 public opinion might be disturbed, and the situation might 
 become critical. The view has been expressed that, even 
 though the native producers might not be likely to be actively 
 hostile to a scheme which left prices unaffected, they would 
 be far from indifferent, and the state of things might become 
 dangerous if prices began to fall sensibly." 
 
 Was this a compliment, unconsciously rendered, to the 
 sensitiveness and natural resentment of injustice of the taxed 
 native of India, sentiments which about a hundred years be- 
 fore were strongly manifested in the American colonies? 
 Pretty much all Christendom had been experiencing falling
 
 416 THE PRESENT AND THE FUTURE 
 
 prices for twenty years without becoming involved in any 
 more serious trouble than a dispute as to whether the signs of 
 industrial depression were really due to the continuing adop- 
 tion of the gold standard and the demonetization of silver, and 
 whether, after all, it was not a good thing a financial evolu- 
 tion, an economic advancement, a progress in civilization. 
 But England, which clung to the gold standard, notwithstand- 
 ing all international efforts and the appeals of India, feared to 
 force a similar experience, even to a slight degree, on the sub- 
 jugated Indian native. Had a prosperous creditor government 
 been able to force upon its own intelligent masses a disaster 
 which the Indian ryot and trader would not endure? So the 
 bimetallist might regard it. 
 
 Gold was yet too precious at the Bank of England to per- 
 mit the government to regard with complacency or favor any 
 scheme likely to withdraw from the market the Indian pro- 
 duction of gold or to withdraw from the existing stores a supply 
 for placing India on the English standard. Here was one of 
 the difficulties which made England extremely anxious for 
 some arrangement for checking the fall of silver, for India 
 must be satisfied and English exporters appeased. But it was 
 becoming apparent that the United States intended to discon- 
 tinue silver purchases. The commission must do something, 
 and so they proposed their compromise of closing the mints to 
 silver except on government account, and announcing that 
 gold would be received at the public treasuries for public dues 
 at the rate of Is. 4d. per rupee. 
 
 The report with this modified plan was signed by all the 
 commissioners, and one of them, Leonard Courtney, before 
 regarded as a leading advocate of the gold standard, announced 
 that he had become a bimetallist. In a note appended to the 
 report, after expressing his belief that the question of India's 
 troubles should first be considered in the light of the inquiry 
 as to whether gold had become more valuable in itself or silver
 
 INDIAN VICEROY ACCEPTS THE PLAN 417 
 
 less valuable in itself, an inquiry avoided by the commission, 
 he says: 
 
 " For reasons upon which I do not now enter, I have come to the 
 conclusion that the divergence between gold and silver has been, 
 to a large extent, due to an appreciation of gold, and this opinion 
 necessarily affects niy judgment of the policy of the Indian govern- 
 ment, which is to adopt a gold standard instead of one of silver. 
 This is to accept as unalterable, if not to intensify, the aggravated 
 burden thrown on India. It may be that no other course is possible, 
 but the home government should ask itself whether it is through its 
 own action that no other course is possible and whether the Indian 
 government might not propose a very different course if there was 
 any chance of its being favorably considered by the supreme govern- 
 ment. I am myself drawn to the conclusion that the home govern- 
 ment is the greatest obstacle, perhaps the only substantial obstacle, 
 to the establishment of an international agreement for the use of 
 silver as money, which, without attempting to restore the position of 
 twenty years since, would relieve India from the anxiety of a further 
 depreciation of its revenue in relation to its liabilities. The problem 
 may be thus stated: The Indian government asks permission to 
 adopt a certain course, but, as is well understood, not the course it 
 would of its own free will first desire to be adopted. In considering 
 whether the course actually proposed should be sanctioned, we can- 
 not refuse to consider whether there are invincible obstacles to the 
 entertainment of the course which would be the first preference of 
 India." 
 
 Although the report of the commission formulating the 
 plan above indicated was signed immediately after the date 
 for the reconvening of the conference, it was still held back. 
 It should be understood that this was not a plan devised under 
 the stress of legislative contention. The hearings were secret, 
 witnesses called in one by one, and the public had no definite 
 knowledge of the thoughts and purposes of the commission till 
 the report was submitted to the government about the middle 
 of June. 
 
 Within a few hours the Viceroy telegraphed the accept- 
 ance of the recommendations of the commission by the Indian 
 government, and asked the Ministers of the Queen for author- 
 ity to act without delay. Five days later the Secretary of State 
 for India telegraphed that authorization. The council of India 
 was immediately summoned to meet at Simla on the 26th. A 
 bill was laid before it amending the currency acts to carry out 
 27
 
 418 THE PRESENT AND THE FUTURE 
 
 the plan, and was at once passed. - The mints were immediately 
 closed, and the same day the fact was communicated to the 
 English government. Gladstone announced it in the Com- 
 mons in these words: 
 
 " It may be for the convenience of the House to learn the 
 exact terms of the telegram received from the Viceroy of 
 India to-day, communicating the steps taken with respect to 
 the report of Lord Herschell's committee on the Indian cur- 
 rency. The telegram is this: 'Council has passed an act, 
 which takes effect at once, to carry out the plan recommended 
 by Lord Herschell's committee. Act provides for close 
 of Indian mints to free coinage of silver from and after 
 date of passing. Arrangements will be made to issue rupees 
 from the mint in exchange for gold and sovereigns at the rate 
 of 16d. per rupee (until further notice) and receive sovereigns 
 and half-sovereigns at public treasuries in payment of govern- 
 ment dues at the same rate. It is intended to introduce a gold 
 standard into India, but gold will not be made legal tender at 
 present.' ' 
 
 The Indian government made a determined effort to main- 
 tain the par of exchange fixed in the arrangement for the clos- 
 ing of the mints, but the price of silver immediately dropped 
 from 37 pence to 30^, and the natural par of exchange to 
 about 13 pence. The result can be imagined. The absurdity 
 of fearing a dangerous rise in exchange was apparent. Silver 
 kept pouring in, and unless the government sold council bills 
 at less than the par of exchange it had undertaken to maintain 
 they could not be sold at all. In July the price of silver rose 
 to 32^- pence on speculative buying in this country, but from 
 that point it began a decline which has seldom been interrupted 
 since. The situation of the Indian government for the first 
 three months of this experiment is thus described in Brad- 
 
 strccfs for September 23: 
 
 " The non-success of the closing of the mints is thus far absolute. 
 The total budget requirements of the Indian government for pay-
 
 BALFOUR'S DEFENCE OF BIMETALLISM 419 
 
 nil-ins to be made In gold in Europe during the current fiscal year 
 are about 18,700,000, against 17,000,000 in 1892. Since March 1, 
 1893, the total amount secured by the issue of council drafts on 
 India has been only 5,850,000 against 7,105,000 in the same period a 
 year ago. Since June 20, when the mints were closed and the at- 
 tempt to create a fixed value of Is. 4d. per rupee for exchange went 
 into effect, the showing has been very much more disastrous. In 
 that period council bills have been disposed of only to the amount of 
 200,000, against 2,200,000 in the same period a year ago." 
 
 The government very quickly abandoned all attempt to 
 maintain the rate of Is. 4d, but had no better success in an 
 effort to maintain the rate of Is. 3^d. This failure naturally 
 threw discredit upon the project in India, and especially in 
 England, where it was more generally understood. Another 
 effect was to strengthen the Bimetallic League, and to awaken 
 it to fresh endeavors. Distinguished recruits openly flocked 
 to it. The apostacy of practical men and students like Gibbs, 
 Goschen, and Courtney resulted in serious thinking, but some- 
 thing like a sensation was caused when a man in Balfour's 
 political position delivered his famous Mansion House address 
 on August 3, or about five weeks after the mints were closed. 
 He had strongly leaned to the bimetallic cause before, but in 
 this address he came forward wdth the strongest open defence 
 of it as a practical policy which had been made in England. 
 He vigorously denounced the attempt to force an inconvertible 
 currency on the Indian masses, declared that the gold of Eng- 
 land was open to an onslaught from any of the large govern- 
 ments of the Continent if the " kissing-at-sight " terms should 
 for any reason cease, and added: 
 
 " We have hitherto been accustomed to boast of our isolation 
 in matters of currency, and we now find ourselves trembling with 
 apprehension at the course that may be pursued by this or that 
 government over whom we have no control. Hitherto, we have 
 boasted of our independence, and we find, to our dismay, that it may. 
 perhaps, rest with the uncommercial policy of some military power 
 on the Continent to upset the whole system of our finance in this 
 counti'y. We have claimed, and we have surely rightly claimed, 
 that we were the great commercial community of the world, trading 
 with all other countries, covering the seas with our fleets, taking 
 toll of all nations, having commercial intercoiirse with all nations, 
 and we now find, I fear partly through our own fault, that the world
 
 420 THE PRESENT AND THE FUTURE 
 
 is divided into gold-using countries and into silver-using countries, 
 that the whole mechanism of exchange between the gold and silver 
 using countries is upset, and that with that mechanism of exchange 
 every merchant who deals with South America, or with India, or 
 with Mexico, or with China is hampered and embarrassed in all 
 his transactions." 
 
 The speculative movement which for a time sustained the 
 price of silver, referred to above, was to some extent due to 
 a rumor, apparently well founded, that the Indian government 
 was to put a heavy import duty on silver. The government 
 doubtless did give this matter early consideration as a means of 
 preventing continuing imports of silver and of keeping up 
 the price of council bills ; but when the fact leaked out 
 of official channels, silver began to be purchased and sent to 
 India in anticipation of a higher price after the tax had been 
 laid. This movement made the sale of council bills still more 
 difficult. 
 
 Meanwhile the India Loan Bill (10,000,000) had passed 
 the Commons, and in the latter part of December came up in 
 the House of Lords, where Lord Kimberly explained the rea- 
 son for it and said: " If it should so happen that this policy 
 of closing the mints should entirely fail, we shall be thrown 
 back into our original situation, which is a very grave one, be- 
 cause at the present price of silver the exchange, if measured 
 as it is usually measured, stands at no more than one shilling 
 and one-eighth; and, speaking in round numbers, at that rate 
 of exchange the government of India would be landed in a 
 deficit of no less than 6,000,000 rupees. That would be a 
 deficit of a most serious and alarming character." In speak- 
 ing of the vast amount of silver which continued to find its 
 way into India, he gave as another cause besides the speculative 
 one the fact that the Indian native seemed to always demand 
 silver for purposes other than currency, and quoted Sir David 
 Barbour, who had just returned to England, as saying that this 
 normal demand had been stimulated in the ordinary way in 
 which a demand is stimulated by a large fall in the price.
 
 DIFFICULTIES OF THE INDIAN GOVERNMENT 421 
 
 " The natives," he said, " generally consider that this is a 
 most favorable opportunity to purchase silver for the purpose 
 of ornaments; and Sir David Barbour thinks that that probably 
 accounts for the larger part of the demand. When we remem- 
 ber that the population of India numbers 287,000,000, we see 
 that any increased demand from so vast a population may 
 easily produce a very considerable result." He might with 
 reason probably have added that, in contrast with the difficul- 
 ties of the government in paying the gold debt to England 
 and with the depression of the Lancashire trade with the 
 Orient, the mass of Indian natives had been enjoying fair har- 
 vests and unusual prosperity, so that they sought silver for 
 their hoardings, and, if silver could not have been sent to India 
 in large quantities at the time when the government was en- 
 deavoring to produce a " rupee vacuum," there might have 
 been trouble. The hoarding propensity is one of the important 
 features of the Indian problem. 
 
 In the course of the same debate the Marquis of Salisbury 
 deplored the measures that had been taken and predicted that 
 they would fail. He believed that the " private mints " of 
 India were unusually active. Soon after this, or early in Janu- 
 ary, 1894, came the announcement that the import tax would 
 not be laid on silver, and, of course, the silver which had been 
 held in anticipation of the tax, and which was on its way there, 
 was dumped on the market with natural results. The price 
 fell to 27(7. in London. In the first part of February the 
 Indian government further announced that it had come to the 
 conclusion to abandon the attempt to keep council drafts any 
 longer at Is. 3^(7., or at any other fixed price. This apparently 
 meant that, as the fiscal year was drawing to a close, and the 
 sale of council bills fell far short of paying the gold debt 
 to England, it would use the remaining days to sell bills at 
 any price, and make up the deficiency out of the proceeds 
 of a loan.
 
 422 THE PRESENT AND THE FUTURE 
 
 This might have been as favorable an opportunity for the 
 reconvening of the conference or the inauguration of a new 
 one as any that had occurred, but the government of the 
 United States had business of an apparently more serious 
 nature on hand. The course of affairs in India and England 
 have been followed without interruption by reference to con- 
 temporary monetary events in other countries, and it will be 
 necessary now to return for a moment's examination of the 
 condition of affairs in this country at the time the India mints 
 were closed. 
 
 In a previous chapter the reader's attention was called to 
 the beginning of an 'export movement of gold to Europe in 
 1889, and to the continuation of the movement through the 
 two following years, although much of the gold was exported 
 when the rate of exchange did not warrant it under ordinary 
 conditions of trade. It is easy, and too often the practice in 
 the study of finance, and more especially in " practical poli- 
 tics " when dealing with financial questions, to attribute any 
 important or striking phenomenon to some one specific cause. 
 ISTo events are so simple. The camel may successfully bear a 
 very heavy burden, but the ultimate straw has serious effects. 
 The public is apt to regard one of the last straws as wholly 
 responsible for the calamity, and there are always those who 
 are interested in making it so, whereas the camel would not 
 have felt it, might have travelled on comfortably and happily, 
 but for the remainder of the burden. 
 
 The first great fact in connection with the export move- 
 ment of gold was the persistent and strong European demand 
 for it, and the determined policy of certain governments, by 
 the imposition of certain trade and banking regulations, to at- 
 tract it their way, or, at least, to prevent its going to America. 
 This has been already explained, but it may be added that some 
 of this gold went into war chests, conspicuously in Russia, 
 where, for the time, it was lost to commerce, and its movement,
 
 CAUSES OP THE EXPORT OP GOLD 433 
 
 therefore, did nothing to relieve the ordinary demands of the 
 market for the metal. 
 
 A second fact was that the prices of the great staples, as 
 well as of lesser commodities, were extremely low, thereby 
 diminishing the value of our exports of merchandise in relation 
 to the quantity. 
 
 Related to the latter fact was another the government 
 revenues were falling off, and were insufficient to meet the 
 ordinary expenditures. 
 
 The fourth fact was the expansion of paper currency 
 through the purchase of silver, and the issue of treasury notes. 
 
 The fifth fact was a narrowing-down of business connec- 
 tions and enterprise because of the uncertainty and timidity 
 as to the results of the announced policy of the administration 
 to reduce the tariff. 
 
 These five facts entered into the situation one after the 
 other in the order given, and there are many good reasons for 
 supposing that it was the last which broke the camel's back, 
 rather than the silver-purchase act. 
 
 There was gold enough in the country, for, though the 
 net gold exports for the four calendar years 1889-92 were 
 $135,000,000, the gold production for the same time was 
 $132,000,000, to say nothing of the gold from ores and base 
 bars produced in Mexico and British America. The drain, 
 therefore, had not reduced our stock. From the time the gov- 
 ernment began to inject silver into its currency, that is, from 
 1878 to 1888, the net excess of imports of gold over exports 
 was $224,000,000, and the gold product was $387,000,000, a 
 total of $611,000,000; ' practically our whole gold stock 
 was obtained after we began to coin silver. It is by no means 
 argued from this that the coinage of silver aided in the acqui- 
 sition of gold, for it doubtless had a contrary effect during a 
 
 1 E. O. Leech, ex-Director of the Mint, Bankers' Ifagazinc, Nov., 
 1895.
 
 424 THE PRESENT AND THE FUTURE 
 
 greater part of the period. It simply shows that silver coinage 
 did not seriously prevent our acquisition of gold, that silver was 
 regularly absorbed by a prosperous and increasing business, 
 and that at the beginning of 1893 our gold stock was about as 
 large as it had ever been. 
 
 Not until the last months of 1892 were there any indica- 
 tions that either the silver currency or that issued on bullion 
 was occasioning any trouble or uneasiness. So long as work- 
 ers Avere busy, mills running, and enterprises starting up and 
 reaching out, the character of the currency attracted no at- 
 tention. But the moment business halted in an attitude of 
 uncertainty and began to contract its lines, whether from fear 
 or simply as a good business act, to await lower duties on cer- 
 tain articles, the burden of too much silver in the currency be- 
 came manifest. The effect would have been the same if an 
 equal amount of outstanding currency had been based directly 
 on gold, on which, as a matter of fact, all our currency finally 
 rests. The currency was not needed, and, as the Europeans 
 were struggling as hard as ever for gold, our surplus money 
 became a convenient article with which to withdraw gold from 
 the Treasury. 
 
 This process, however, could have continued but a short 
 time but for the influence of the third fact mentioned above 
 insufficient revenue. If the paper which was used to with- 
 draw gold could then have been held in the Treasury, the cur- 
 rency would very quickly have become contracted to the point 
 required for the diminished business. But, with daily deficits, 
 the Treasury could keep neither its gold nor the currency 
 which withdrew it. The gold went abroad and the currency re- 
 turned to the over-supplied channels to again become available 
 for the same process. It was a vicious circle. The halt in busi- 
 ness to await tariff revision made currency redundant and di- 
 minished the revenues of the government; a redundant cur- 
 rency and a lean Treasury forced out the gold, and the de-
 
 THE PANIC OF 1893 425 
 
 parture of gold increased the hesitation of business. At the 
 same time the European demand for gold, much of which was 
 purchased by the Rothschild group for Austria, and the low 
 price of exportable merchandise were operating in the same 
 direction. 
 
 The whole responsibility for this situation was thrown upon 
 the silver-purchase act by the financial and banking people, 
 with whom it was naturally unpopular for two reasons the 
 selfish one, because the treasury notes operated against a prof- 
 itable increase of national bank notes, and the unselfish one, 
 because the continuance of the act was contrary to sound fed- 
 eral finance. Obviously, however, the repeal of the act could 
 be no cure for the situation then existing. The redundant cur- 
 rency was already there. Its repeal was a wise act for the 
 future; it might prevent a similar situation when adverse con- 
 ditions again conspired together. But, bad as the act was at 
 the time from every point of view, and especially from a bi- 
 metallic standpoint, as it was a continuing obstacle to an in- 
 ternational agreement, its repeal could then help neither the 
 Treasury situation nor business, and it did not. 
 
 President Cleveland took the view of those who thought, 
 or professed to think, it the whole evil. By the time the Indian 
 Currency Commission made their report the free gold in the 
 United States Treasury had decreased to $89,000,000, and 
 while the Indian government was hurrying to close its mints 
 in anticipation of the repeal of the silver-purchase act here, the 
 panic came on. Four days after the Indian mints were closed 
 the President summoned Congress to meet, August 7, to re- 
 peal the silver-purchase act, to which he wholly ascribed " the 
 present perilous condition." 
 
 The redundant currency at once disappeared; people drew 
 their money out of the banks and put it under their pillows, 
 and by the time Congress met to cure the situation by cutting 
 off the source of supply, those who were still trying to do busi-
 
 426 THE PRESENT AND THE FUTURE 
 
 ness were paying a premium for the very notes the issue of 
 which it was proposed to discontinue. All the available cur- 
 rency was drawn from the Treasury unfortunately, the 
 amount was small because of the deficits in revenue and gold 
 returned so freely that the reserve was at a higher figure than 
 for six months. Gold again circulated. Laboring men were 
 paid with it so far as possible. It was the cheapest money to be 
 had. Exchange turned and gold was largely imported during 
 the summer. Indeed, we had the interesting spectacle of 
 England sending us gold and taking our silver to send to India, 
 where it was endeavoring to produce a scarcity of rupees. 
 
 The President in his message to Congress on assembling 
 strongly argued that the Treasury reserve had been depleted 
 by the increasing redemption of treasury notes in gold, such 
 redemption being necessary to maintain the parity ; but it will 
 probably appear to most persons who reflect upon it now that 
 there is no rational basis for a gold reserve in a country main- 
 taining a gold standard unless it stands for the redemption of 
 an outstanding currency of less intrinsic value than gold. In 
 the permanent preservation of a parity between money of the 
 standard value and money of a less value, there can be no 
 fixed discrimination against different forms of the currency 
 of the lower order. If every treasury note and greenback 
 were cancelled and the currency of silver certificates became 
 too abundant, and if a situation such as that of 1893 ap- 
 peared, the maintenance of the parity would quite as much re- 
 quire the redemption of those certificates in gold, if gold were 
 wanted and the certificates were not. In the last analysis, all 
 our currency hangs on the same peg the ability of the gov- 
 ernment to pay in gold. In this respect the situation of the 
 Bank of England is precisely similar; if there is a crisis, and 
 people rush in to redeem their notes, the bank must secure 
 more gold, as it did from the Bank of France in 1890. In 
 most other respects, of course, the Bank of England and the
 
 REPEAL OP THE ACT OF 1890 427 
 
 United States Treasury are very dissimilar institutions. The 
 former can generally regulate the proportion of its reserves to 
 its obligations by its discount rate; the latter must depend for 
 its immunity upon a surplus balance large enough to enable it 
 to withdraw for the time whatever currency is presented for 
 redemption when money is plenty, and enable it to pay out 
 the currency for gold when money is stringent. Regulated by 
 such a balance, there never could be any question of the ability 
 of government to redeem its notes and certificates, for a busy 
 and industrious people can, under no circumstances, afford to 
 redeem its currency except within certain narrow limits. 
 
 Looked at, however, from the standpoint of the desira- 
 bility of an international agreement, the repeal of the silver- 
 purchase act was demanded, just as from the same standpoint 
 its enactment was unwise. But the free-silver men who had 
 denounced it as a half-way measure rallied to its defence, after 
 making sure that they could not pass a free-coinage amendment 
 to the repeal resolution. Such an amendment was lost in the 
 House by a vote of 125 to 226, though the vote on the Demo- 
 cratic side was 101 to 112. The dreary struggle lasted till 
 November 1, when the repeal resolution was passed with an 
 amendment introduced by the Democratic leader for repeal in 
 the Senate, declaring it to be the policy of the United States 
 to continue the use of both gold and silver as standard money, 
 and to coin both into money of equal intrinsic and exchange- 
 able value, " such equality to be secured through international 
 agreement, or by such safeguards of legislation as will insure 
 the maintenance of the parity in value of the coins of the 
 two metals, and the equal power of every dollar at all times in 
 the markets and in the payment of debts." So far as this addi- 
 tion could have any effect at all, it simply added new life to 
 Europe's attitude of expectancy, and soothed in a measure the 
 silver section of the Democratic constituency. 
 
 By the time the law was repealed the panic was over, and
 
 428 THE PRESENT AND THE FUTURE 
 
 money had reappeared from its hiding-places, but business was 
 flat; the money was not needed, and gold again began to leave 
 us. The repeal of the law had not touched the vicious circle. 
 Every day showed an increase deficit in the Treasury, and the 
 currency which was presented for redemption had to be imme- 
 diately reissued to pay the ordinary expenditures. 
 
 This sword of Damocles was still hanging over business. 
 The uncertainty as to what a somewhat unmanageable ma- 
 jority in Congress would do with the customs duties abided 
 still. So long as business halted the currency would continue 
 redundant, and the vicious circle would be in full operation. 
 In his first annual message to Congress, a month after the 
 repeal, the President intimated that in time a comprehensive 
 plan for currency reform would be presented, and added : 
 
 " The monetary conference which assembled at Brussels upon 
 our invitation was adjourned to the 30th of November, in the present 
 year. The considerations just stated and the fact that a definite 
 proposition from us seemed to be expected upon the reassembling 
 of the conference led me to express a willingness to have the meet- 
 ing still further postponed. It seems to me that it w r ould be wise 
 to give general authority to the President to invite other nations to 
 such a conference at any time when there should be a fair prospect 
 of accomplishing an international agreement on the subject of 
 coinage. I desire also to earnestly suggest the wisdom of amend- 
 ing the existing statutes in regard to the issuance of government 
 bonds." 
 
 He closed his message with an appeal for a reduction of 
 the customs duties and an enlargement of the free list, when, 
 even then, deficient revenues constituted a leading element in 
 the vicious circle. Two months later the first issue of bonds 
 to replenish the gold in the Treasury was announced. They 
 sold for $58,660,917, and $24,396,459 of the gold to purchase 
 them came from the Treasury. Is it not exactly correct to say 
 that the government thus took $24,000,000 out of its pocket, 
 guaranteed to pay 5 per cent, on the amount for ten years, and 
 then put it back. The fact at the bottom was that the govern- 
 ment needed the money to pay its expenses. At the same time 
 the administration leaders in Congress brought in a measure
 
 THE POLICY OP THE ADMINISTRATION 429 
 
 calculated to reduce the revenues $60,000,000 a year, on the 
 basis of our previous importations; and the very same Con- 
 gress, which had been besought to repeal a law adding less 
 than $50,000,000 a year to the currency, passed an act for the 
 coinage of the seigniorage on the bullion in the Treasury 
 enough to make over 55,000,000 standard dollars. Though 
 vetoed, it afforded another contribution to the vitality of 
 Europe's attitude of expectancy. 
 
 The developments of the line of policy the administration 
 had adopted may be dismissed with a few words. Having 
 started out on the theory that the treasury notes issued under 
 the repealed silver-purchase act had caused the trouble, the 
 logical conclusion was that any notes directly redeemable in 
 gold should be withdrawn and destroyed; for the trouble con- 
 tinued. Fifteen months after the repeal of the obnoxious act 
 the President said in a message, in recommending a law for 
 an issue of bonds to retire the greenbacks and treasury notes : 
 
 "The real condition which confronts us consists of a lack of 
 confidence, widespread and constantly increasing, in the continuing 
 ability or disposition of the government to pay its obligations in 
 gold. This lack of confidence grows to some extent out of the 
 palpable and apparent embarrassment attending the efforts of the 
 government under existing laws to procure gold and to a greater 
 extent out of the impossibility of either keeping it in the Treasury 
 or cancelling obligations by its expenditure after it is obtained." 
 
 No doubt the feeling did extensively exist that the govern- 
 ment might fail to pay its obligations in gold, but it could - 
 hardly have derived any added strength from the fact that a 
 month after this gloomy message, Congress having refused to 
 sanction a law for the issue of bonds asked for, a large block 
 of 4-per-cent. coin bonds were sold to a syndicate for 104.495, 
 which immediately resold them to a second syndicate for 112.5, 
 the bonds soon appearing on the market at 119. 
 
 Quite naturally, also, a policy which overlooked the true re- 
 lation of the deficient revenue and saw no salvation for a 
 country maintaining a gold standard except in the destruction
 
 430 THE PRESENT AND THE FUTURE 
 
 of all notes redeemable in gold led to propositions for a bank- 
 note currency such as the so-called Baltimore plan and that 
 of the Secretary of the Treasury. 
 
 The real effect of the President's policy was to arouse in the 
 West a spirit of enmity against the banks, and in the banks a 
 spirit of intolerance of the silver sentiment of the West, with 
 the final result of driving the greater part of his party, bag 
 and baggage, into the silver camp. In this migration we may 
 leave them for a time, and notice certain events abroad. 
 
 The Indian government was finding that time added no at- 
 tractions to the experiment it had made with the mints. 
 " Though silver was no longer coined," wrote the Japanese 
 Minister of Finance in 1894, " its circulation suddenly in- 
 creased." A Hindoo banker, writing in March, 1894, gave a 
 very plausible explanation. The price, he said, had been so 
 much lowered in England and America, that 100 tolas of sil- 
 ver, which cost 106 rupees once, could then be purchased in 
 Bombay for from 85 to 86 rupees. As the native derived 
 prominence from the amount of silver he possessed, it was not 
 strange that a large trade in bullion developed, as well as much 
 illicit minting. Finally, the government placed a 5 per cent, 
 import duty on the metal, the standard of value and the legal 
 tender of the people. Customs duties were also placed on other 
 imports. In this way exchange was brought somewhat nearer 
 the fixed rate, and an indirect tax was levied on those who could 
 not endure further direct taxation. The production of the 
 country was good during these years, and in this way the 
 Indian government worked along, but in a condition no more 
 satisfactory than before the mints were closed. Meanwhile 
 the leading journals complained loudly, and in England the 
 dissatisfaction among the merchants dealing with India grew 
 rapidly. The Bimetallic League daily developed strength and 
 influence, and bimetallism was even made an issue in parlia- 
 mentary elections. The tide rose high in 1895.
 
 THE MIRBACn RESOLUTION FOR A CONFERENCE 431 
 
 From the time of the adjournment of the Brussels con- 
 ference the Agrarian party in Germany had been agitating 
 for bimetallism. A silver commission was appointed to ex- 
 amine into the effects of the fall of silver on German indus- 
 tries, and the results greatly stimulated the bimetallic move- 
 ment. Early in 1895, Count von Mirbach, the Agrarian and 
 bimetallic leader, undertook to secure a majority of the Reich- 
 stag for a demand for another conference and for the rehabili- 
 tation of silver. He quickly obtained 211 signatures, or more 
 than a majority, and on February 15 submitted his motion, 
 stating at the outset of his speech that " the only way in which 
 an international union can be thought of is on the basis of a 
 fixed relation between gold and silver, established by an inter- 
 national treaty." He quoted statistics to prove the fall of 
 prices since Germany adopted the gold standard, and argued 
 to show that under monometallism agriculture had gone from 
 bad to worse in England and Germany, and that. English ex- 
 ports to silver-using countries had steadily declined. Refer- 
 ring to this country he said : 
 
 " If there is destined to be no bimetallism, we should wish the 
 American conditions to remain as they are, although, in my opinion 
 they are untenable for America for any length of time. The golden 
 treasure of America has dwindled, has sunk in such a way that it 
 can no longer provide in gold for covering its currency. Every 
 moment the gold reserves drop to the lowest ebb and the Secretary 
 of the Treasury is driven to have recourse to petty loans, which are, 
 no doubt, pleasant enough to the gentlemen who furnish him with 
 the loans, for I, somehow, imagine that those who supply the money 
 quickly recover it and then renew the game. Should there be no 
 currency union, one of two things will happen. Either America 
 will address herself in all earnestness to the establishment of a 
 currency and seek a loan of $500,000.000 in gold in the European 
 market but what of our gold reserves then? and what of the Eng- 
 lish Bank and all the rest? this alone shows how insufficient gold 
 is, just as soon as America goes earnestly to work. Or and this 
 might prove even more calamitous to us America will renounce 
 the coining of gold altogether, and go over to the coining of silver. 
 Then we would be confronted with differences in value which would 
 threaten us more seriously than the present conditions. Then there 
 would really remain no other course than to close ourselves up 
 hermetically against America, and afford America an opportunity 
 to absorb the whole commerce with Asia, by virtue of the parity of
 
 432 THE PRESENT AND THE FUTURE 
 
 its silver currency to that of Asia. I believe that because things 
 are as they are in America we should heed the warning and not 
 wait with our hands in our lap; we should take hold of those things 
 before it is too late." 
 
 He also said that America could actually absorb the Euro- 
 pean gold reserves and hold them fast, and force a decision of 
 the currency question. But, in view of the situation then exist- 
 ing in this country, he considered such an event too remote 
 to be anticipated. The reader will observe that he did not 
 admit what so many silver men in this country claim, that free 
 silver coinage by us alone would restore the parity. On the 
 other hand, he believed it would put us on a parity with Asia, 
 and that what Europe would have to fear in such a case would 
 be our competition with Europe's manufactures. As a matter 
 of fact, European financiers have no fear on this score. To 
 bring about such a competition, especially in manufactures, 
 there would need to be a fall in wages in this country relative 
 to the price of necessaries of life a matter which the advo- 
 cate of free silver in this country carefully avoids. Count 
 von Mirbach was speaking at a time when our administration 
 was issuing bonds to secure gold, and did not anticipate the 
 conditions of two years later when, under the same currency, 
 there would be gold enough in the reserves, and abundant 
 prospects of securing much more. The fact that we might by 
 absorbing gold and by a practical industrial policy hold it 
 fast, thereby forcing a decision of the question, doubtless 
 seemed remote to many then. 
 
 Dr. Lieber, leader of the Clericals, and one of the signers 
 of the demand, denned in a brief declaration the attitude of his 
 party, and of the neutral deputies in general. He said: "We 
 believe that the present time is opportune, in view of the uni- 
 versal depression of economic life, to revive the international 
 consideration of the problem affecting most vitally the trade 
 of the world." In Germany, the Radical and Social Demo- 
 cratic elements are for the gold standard. They charged the
 
 PASSAGE OF THE MIRBACH RESOLUTION IN THE REICHSTAG 433 
 
 supporters of the motion with working for political and not 
 economic ends. Dr. Theodore Barth, of the Radical Union, 
 said: " This is the agitation of the Agrarian high-tariff people 
 in another guise. It is designed to deceive the peasants, to lead 
 them to believe that the remedy for their present distress is to 
 be found, not in wholesome reforms of the land laws, but in the 
 adoption of a double standard. Such an agitation is doomed to 
 failure. I do not deny that another conference like the one in 
 Brussels may be brought together, but what of it ? The confer- 
 ence will result in nothing, as did the meeting at Brussels." 
 
 Chancellor von Hohenlohe made a conservative statement, 
 but one none the less significant. He said: " It must be con- 
 ceded, without prejudice to our national currency, that the 
 growing disparity of value between the two coin-metals is pro- 
 ducing a detrimental reaction upon our industrial life. I am, 
 therefore, inclined, in the further pursuit of the endeavors 
 which have resulted in the convoking of the Silver Commis- 
 sion, to consider with the confederated governments whether 
 other states which are essentially concerned in the enhance- 
 ment of the value of silver cannot be brought into a friendly 
 exchange of views on mutually protective measures." 
 
 Count von Mirbach's motion passed by a vote of more 
 than two to one a striking fact when compared with Ger- 
 many's refusal to participate in the Conference of 1878, and 
 with her expressions in other conferences of the government's 
 satisfaction with the monetary policy it had adopted. 
 
 The Council of State, under the chairmanship of Emperor 
 "William, devoted two days, March 14 and 15, to the considera- 
 tion of the subject, and finally resolved as follows: 
 
 " According to the statement of the Chancellor during the session 
 of the Reichstag, February 15 last, an exchange of views of the 
 confederated governments with other states has been proposed con- 
 cerning common measures for obviating the detrimental reaction 
 recognized to have resulted to industrial life from the increasing 
 disparity between the values of gold and silver. In reference to 
 this statement, of which the Council of State has taken note with 
 28
 
 434 THE PRESENT AND THE FUTURE 
 
 pleasure, the same believes that no further measures should be 
 taken at the present time, and that the result of the steps already 
 taken should be awaited." 
 
 This was an assurance that the Chancellor had taken the 
 matter into his own hands. Some of the monometallists in the 
 Council endeavored to incorporate in the first part of this 
 resolution the words, " without prejudice to the existing stand- 
 ard," but this was declined, and thus the statement was less 
 conservative than that made by the Chancellor to the Reich- 
 stag, though the Council is a much more conservative body. 
 This action considerably aroused trade circles. On April 4 
 at Berlin, a committee of the trade congress adopted the fol- 
 lowing: "The commercial and industrial circles must re- 
 gard every weakening of the well-ordered gold standard in 
 Germany as a fundamental injury to German economic life." 
 An association for the protection of the gold standard was 
 formed, and the Chambers of Commerce generally declared 
 against bimetallism. But the government would eagerly have 
 entered a bimetallic union had England led the way. 
 
 The events in England at this time were quite as remarka- 
 ble. On February 26, Robert L. Everett, a member of the 
 Liberal party, introduced in the Commons the following reso- 
 lution : 
 
 " That this House regards with increasing apprehension the con- 
 stant fluctuations and growing divergence in the relative value of 
 gold and silver, and heartily concurs in the expressions of opinion 
 on the part of the government of France and the government par- 
 liament of Germany, as to the serious evils resulting therefrom. It, 
 therefore, urges upon Her Majesty's government the desirability of 
 co-operating with other powers in an international conference for 
 the purpose of considering what measures can be taken to remove 
 or mitigate these evils." 
 
 Sir William Ilarcourt, Chancellor of the Exchequer, said 
 he had never denied the existence of evils in consequence of 
 the growing divergence of the values of gold and silver. Eng- 
 land had not refused to co-operate when other countries had 
 desired a monetary conference. But the majority of the Euro- 
 pean countries had declared in favor of a monometallic cur-
 
 THE POSITION OF FRANCE 435 
 
 rency at the Brussels conference. He did not think Germany 
 had changed her opinion. When a proposal frqm Germany or 
 any other country reached the government, it would be time 
 enough to consider the question of England joining another 
 conference. A misconception, he said, existed in regard to the 
 cause of the failure of the Brussels conference. The gov- 
 ernment of the United States in proposing that meeting ex- 
 pressed a wish that it be held with a view to establish a ratio 
 of values of gold and silver, by the leading nations, by means 
 of the free coinage of silver in their respective mints. Eng- 
 land, said Harcourt, could not accept an invitation couched in 
 such terms, and he could not then enter into a matter which 
 impeached the first principles of English currency. The pro- 
 posals had then turned to means for a larger use of silver, and 
 this policy the British delegates had supported. Harcourt an- 
 nounced at the close of his speech that he would not oppose 
 the Everett resolution, and it was passed by a unanimous vote. 
 Neither side could afford to make a party question of it, for 
 a large section of both were affected by the bimetallic propa- 
 ganda. 
 
 Such events in England and Germany were necessarily re- 
 flected in French opinion. The indifference of France at the 
 Brussels conference was, as has been seen, due largely to the 
 fact that, after a long struggle, the Bank of France had ac- 
 quired an ample stock of gold to counterbalance its large stock 
 of silver, and to a consequent disposition to avoid further in- 
 crease in silver coinage. After the conference the bank con- 
 tinued to accumulate gold, and at this time held the enormous 
 sum of $411,000,000, though its stock of silver was still about 
 $330,000,000. In stating the position of his government, the 
 French Minister of Finance was reported as saying that he 
 agreed with the claims of the bimetallists that the abandon- 
 ment of the mintage of silver had proved extremely disastrous, 
 though he did not attribute the agricultural crisis, in all its
 
 436 THE PRESENT AND THE FUTURE 
 
 length and breadth, solely to the suspension of the free 
 coinage of silver. But he believed that the abandonment 
 of bimetallism, coinciding with other causes, had precipi- 
 tated the crisis and given it a far graver character than it 
 would have otherwise had. France alone, he said, could not 
 solve the problem. If she attempted to do so, she would have 
 to pay all the cost of the solution. He pointed out that, in the 
 countries up to that time most attached to the monometallic 
 system, and notably in England, a current of opinion in favor 
 of a serious attempt to find a remedy for the crisis was being 
 developed, and the action of the Manchester Chamber of 
 Commerce in demanding that by some means the value of 
 silver be restored he considered an important event. He 
 added: " We may differ in opinion as to the precise methods 
 to be employed, but I believe that in England and Germany 
 there is a genuine movement in favor of the resumption of 
 the coinage of silver. I cannot say at what moment this prog- 
 ress will be sufficiently decisive to finally overpower the re- 
 sisting forces, which are great. In such a position what should 
 be the attitude of the French government? We were sum- 
 moned in 1892 to a conference at Brussels, which unfort- 
 unately, has been without result and has been adjourned in- 
 definitely. Although I have been Minister of Finance but a 
 few days, I have already discussed this question with my col- 
 league, the Minister of Foreign Affairs. We are completely 
 in accord. Although I believe that France cannot alone settle 
 the question, I am of opinion that she ought not to restrict her- 
 self to an attitude of indifference in waiting. She ought to in- 
 dicate in a marked manner that she desires to hasten the solu- 
 tion. She ought to assume an attitude which will encourage 
 the movement of public opinion in neighboring countries. 
 This is the policy which the Minister of Foreign Affairs will 
 adopt and which I have adopted." 
 
 The National Bimetallic League of France had meanwhile
 
 BALFOUR'S ADDRESS TO THE BIMETALLIC LEAGUE 437 
 
 lost none of its importance. Loubet was its president, and 
 among its vice-presidents were Magnin, Governor of the Bank 
 of France, De Normandie, Cernuschi, Meline, Senator Beren- 
 ger, and Guichard, president of the Suez Canal Company. 
 But the league did not advocate action by France or any other 
 country alone. The annual meeting of the league was held in 
 April, and a statement made by the venerable Cernuschi indi- 
 cated the true position of international bimetallists: 
 
 " As soon as the coinage of silver by the United States was free, 
 Europe would act towards the United States just as Germany acted 
 towards France, so long as France coined silver. Europe would de- 
 monetize large masses of silver and send them to Philadelphia to 
 get them made into dollars, with which dollars she could get gold 
 dollars despatched to her. Very venturesome would be those who 
 should recommend the United States of America to undertake, 
 single-handed, what France will undertake only triple-handed." 
 
 The annual meeting of the English Bimetallic League was- 
 held at the Mansion House, London, April 3, and the notable 
 feature was the speech of Balfour, the Conservative leader of 
 the House of Commons, in favor of international bimetallism. 
 The following extract indicates its character: 
 
 " They talk of the excellence of the British system of currency. 
 What is the British system of currency? We are an empire, as we 
 are proud to think, with interests and with possessions in every part 
 of the world. I concentrate my attention, not upon the self-govern- 
 ing colonies, which, for purposes of currency, may be described as 
 independent of us, but upon those great portions of our great em- 
 pire which are practically under the rule of the British parliament; 
 and what is the system of currency prevailing in them? Or is there 
 a system of currency? You go to Hong Kong and the Straits 
 Settlements. You find thei'e that obligations are measured and 
 debts are paid in silver. You come to England and you find that 
 obligations are measured and debts are paid in gold. You stop half- 
 way in India and you find that obligations are measured and 
 debts are paid in something which is neither gold nor silver, but is 
 the strangest product of monometallic ingenuity which the world has 
 ever seen a currency which is as arbitrary as any forced paper 
 currency of which the world has ever heard, and which is as ex- 
 pensive as any metallic currency the world has ever heard of, which, 
 happily, combines in itself all the disadvantages of every system of 
 currency which human beings have ever tried before. That is 
 what we call the British system of currency. 
 
 " I do not believe that the common-sense of nations will long 
 tolerate such a state of things. When I look to what is going on in 
 America, in Germany, and in France nay, when I look to what is 
 going on even in the most conservative commercial centres in this
 
 438 THE PRESENT AND THE FUTURE 
 
 country I say to myself that the reproach which is now upon us 
 cannot surely be of long duration, and that the time is not far dis- 
 tant when men of all parties, of all occupations, and of all interests 
 will combine to say that it is our business to do our best, at all 
 events, to bring to an end a reproach to our common civilization and 
 to introduce into our international transactions some medium of ex- 
 change less open to criticism, less destructive of settled industry, 
 less embarrassing to the merchant than the absurd system under 
 which it is our present misfortune to live." 
 
 Such a state of feeling in Europe naturally had some effect 
 in this country. Soon after the action of the Reichstag, Sena- 
 tor Wolcott, of Colorado, offered an amendment to the Sundry 
 Civil bill looking to the appointment of delegates to an inter- 
 national conference if called by one of the European govern- 
 ments. It authorized the appointment of three delegates by 
 the President, and six others to be " a joint committee of this 
 Congress, three of said committee to be members of the Senate 
 and three of the House of Representatives." The Senate be- 
 fore adjourning named Senators Teller of Colorado, Jones of 
 Arkansas, and Daniel, of Virginia all radical silver men. 
 The House requested Speaker Crisp to name himself, which 
 he did, filling up the quota with Culberson, of Texas, and 
 Ilitt, of Illinois. Of all these men, Hitt was the only one 
 who had not advocated the free coinage of silver by the 
 United States alone. 
 
 Another international conference seemed to be at hand. 
 In our financial circles, the wisest men thought that the senti- 
 ment in England and Germany was such that one of those 
 governments would make a proposition. Never had an inter- 
 national agreement seemed so likely. But our curious fatality 
 again put in its appearance. As has been said, the policy of 
 the President was by this time driving his party into the silver 
 camp. Bitter against the banks and the bond syndicate, over- 
 whelmed by a severe defeat in the state elections of November, 
 disgusted with the effects of the new tariff bill, shorn of every 
 issue on which the party had won a victory in 1 892, the Demo- 
 cratic masses turned naturally to the only issue which seemed
 
 EFFECTS OF THE "SILVER CRAZE" OF 1895 439 
 
 available, and the leaders accepted it as the only hope of 
 future salvation. At the very time when there seemed at last 
 to be a chance for bimetallism, a veritable " silver craze " set in 
 everywhere outside of the New England and Middle States. 
 The party organs clamored loudly for free coinage. A West- 
 ern lawyer who had been studying the subject brought forth 
 " Coin's Financial School," fancifully illustrated, and thou- 
 sands of the little pamphlets went broadcast over the land. 
 It became the topic of the day. Our gravest economists con- 
 descended to answer its arguments, and the papers were full 
 of it. Congress had adjourned in March. Otherwise there 
 would doubtless have been another free-silver bill and a dis- 
 cussion. 
 
 Of course, under such circumstances, no proposition came 
 from Europe. The bimetallic tide suddenly receded, and the 
 President had no occasion to complete the commission Con- 
 gress had authorized. Genuine as were the pleas of the Euro- 
 pean bimetallists for a conference, severe as were the embar- 
 rassments of the different governments, no government could 
 be made to act while such a silver furor was sweeping this 
 country. They at once drew back into their attitude of ex- 
 pectancy. The London Statist, commenting on the affair, 
 said that there was no telling what the voters of the United 
 States would do next. 
 
 The administration labored along on the theory that a 
 gold reserve could not be maintained so long as notes redeema- 
 ble in gold were outstanding, which was equivalent to saying 
 that so long as the people had a redeemable currency the gov- 
 ernment could not insure a stock of the redeeming metal. In 
 his message to the new Congress which convened on December 
 2, 1895, the President dwelt at length on the legal-tender 
 note and its influence, as he saw it 1 , on the gold reserve. There 
 was, however, no suggestion of a deficit in the revenues of the 
 government, though it was constantly accruing, and from the
 
 440 THE PRESENT AND THE FUTURE 
 
 first of the year already amounted to $36,000,000. As has 
 been explained, it was the deficit and nothing else which pre- 
 vented the government from taking the surplus currency in 
 the hands of the people and holding it till business revived. 
 Within twenty-two months the government had obtained from 
 three bond sales $182,000,000. Had it been simply a question 
 of exchanging gold for legal tenders, as the administration 
 argued, the net cash balance in the Treasury at the end of that 
 period (December 1) should have exceeded that at the begin- 
 ning by just that amount. On the contrary, the net cash bal- 
 ance had increased only $93,000,000. Between the first and 
 second bond sales the Treasury lost more than $35,000,000 
 of its cash balance; between the second and third more than 
 $21,000,000, and from the third to the meeting of Congress 
 $32,000,000 more. Had this sum of $88,000,000 been a sur- 
 plus instead of a deficit, there would have been very little trou- 
 ble. Although the bond sales considerably contracted the cur- 
 rency, not till after the extensive popular loan of February, 
 1896, did currency become sufficiently contracted to prevent it 
 from constantly returning for the Treasury's gold. 
 
 It was another anomaly of the situation that the Treasury, 
 under the revised tariff, was looking for relief from deficits in 
 the same direction whence a further drain of gold by export 
 might be expected. Here was another vicious circle; there 
 must be an increase of imports of merchandise to add to our 
 revenues when the already existing volume of imports was 
 enough to justify gold exports. 
 
 The doctrine of a protective tariff may be contrary to the 
 classical economic notions of a perfectly ideal commercial 
 condition of things. It would evidently be out of place for a 
 country like England, whose foreign investments, according to 
 a recent English authority, amount to $15,000,000,000, which 
 means that, as a creditor of the world, she demands a yearly 
 return in gold of some $450,000,000 at least. The position of
 
 ANOTHER FREE-SILVER BILL IN CONGRESS 441 
 
 the United States is so different that they must pay a part of 
 this return not less probably than $75,000,000 annually - 
 in interest and dividends. An ideal theory can not fit two 
 such diverse conditions. 1 
 
 The House of Representatives elected in the sweeping 
 Republican victory of 1894 had a large Republican majority, 
 but the Senate was more than ever a silver body. While the 
 Republicans in the lower chamber felt it incumbent upon 
 them to undertake some remedy for the situation, the remedy 
 which from their party position they would naturally propose 
 would be sure to meet the disapproval of the President, and, 
 moreover, a national election was but eleven months off, and in 
 a general way the inability of the administration to mend mat- 
 ters would naturally be to Republican advantage. Pursuant 
 to the President's suggestion, however, a bond bill was 
 framed and passed, but in the Senate was quickly transformed 
 into a free-silver-coinage bill by a vote of 42 to 35. As thus 
 modified, the measure called for the free and unlimited coin- 
 age of silver dollars at 16 to 1, the coinage of the seigniorage 
 on the bullion in the Treasury, and the immediate issue of sil- 
 ver certificates to represent such seigniorage pending its coin- 
 age. This would have involved an inflation of about $100,- 
 000,000, as soon as the printing-presses and the mints could 
 complete the work. The bill also provided for the redemption 
 
 i In the examination of Robert Hardie. of the Council of India, 
 by the Indian Currency Commission !n 1892. this dialogue occurred: 
 
 " Q. Has the balance of exports over imports become less or 
 greater than it was? A. It is greater, because the Indian council 
 bills are greater, and the amount of silver that is going into India 
 just now is rather greater. I rather take the view that hardly any 
 country with a large foreign debt is in a position to maintain a gold 
 standard without some special means to insure that her balance of 
 exports will be in excess of her imports to a sufficient extent to pay 
 for the foreign debt, and that special means seems to me to be a 
 protective tariff. 
 
 " Q. But all the colonies have not import duties. New South 
 Wales has no great import duties. A. Well, I believe she has been 
 carrying on her financial system by loans in England."
 
 442 THE PRESENT AND THE FUTURE 
 
 of greenbacks and treasury notes with gold coin or silver dol- 
 lars. The result was a permanent disagreement between the 
 two houses, and nothing was done. This was doubtless fortu- 
 nate. The forces were gathering for an open battle of the peo- 
 ple at the polls. The issue was to be squarely carried to the 
 court of last resort, and Europe, always supplied with fresh am- 
 munition for its attitude of expectancy, continued to wait to 
 see what the voters would do next. 
 
 They performed the greatest service for the cause of in- 
 ternational bimetallism, probably, which its unfortunate his- 
 tory thus far records. They deprived Europe's attitude of 
 expectancy of much of its rational basis, showing to those who 
 do not readily understand us or our institutions that, however 
 frequently or persistently inclined our people may seem to 
 advocate an unwise course for securing their ends, they acquit 
 themselves judiciously when it comes to the critical point of 
 actually accepting or rejecting the unwise course. To be sure 
 the issue was clouded somewhat by other elements, but that is 
 always a feature of our political life, and sometimes a saving 
 one. 
 
 While the Democratic party, to avoid bankruptcy as to 
 principles, eagerly embraced the advocacy of the free coinage 
 of silver, to secure further support it took up with a lot of 
 notions which the greatest exigencies of its long career had 
 never forced upon it before. It made a broad appeal to all 
 the discontented and disgruntled, and they were many after 
 such a business depression, and after such an unwise policy as 
 the administration had pursued. It linked an impure socialism 
 to an indiscreet and blatant silverism. It appealed largely to 
 the passions of such as were easily influenced by unpleasant 
 conditions and too easily deceived as to their real cause. 
 
 The strength of the other side consisted in those whose 
 opinions, at least in the beginning, were influenced less by the 
 currency question than by the policy of a protective tariff. In
 
 RESULT OF THE ELECTION OF 189C 443 
 
 this they were, perhaps, wiser than they knew, for the cardinal 
 fact that a protective tariff is needed in this country to main- 
 tain a sound currency was generally overlooked. Undeceived 
 in 1893 by the legitimate fruition of the sort of tariff reform 
 for which many had voted in 1892, under the promise of a 
 " golden era of trade emancipation," the sturdy farmers, me- 
 chanics, and laborers turned to the Republican party in 1894, 
 and saw in William McKinley the most conspicuous exponent 
 of the policy they desired in the future. It did little good for 
 those Republicans in the East, who, for political reasons, pre- 
 ferred another candidate, to exploit the theory that he was not 
 a thorough advocate of gold. It is safe to say that no presiden- 
 tial candidate could secure a vote of respectable dimensions in 
 this country if standing without qualification for an exclusive 
 gold standard and nothing else. The word " gold" as if alone 
 it had saving qualities was inserted in the St. Louis plat- 
 form after an almost ridiculous struggle, but a renewal of 
 efforts for international bimetallism was also demanded. 
 While, however, the tariff and McKinley's personality were 
 the dominating influences early in the campaign, the noise was 
 made over the question of gold and silver. The more one side 
 shouted for silver, the more the other shouted for gold, till at 
 last the subject developed into the apparent issue. It was 
 fortunate for the cause of bimetallism that it did so. 
 
 For the first time in twenty years, or since we began to im- 
 portune for international bimetallism, Europe was given to 
 understand that there was little hope for free coinage of silver 
 , here without free coinage abroad. With the inauguration of a 
 policy better adapted to our economic conditions, the crisis 
 which continually threatened the Treasury has passed, gold 
 accumulates in its vaults, occasional exports excite no alarm, 
 and business is asking for the very currency which but a little 
 time ago Congress was asked to cancel for the salvation of 
 our credit. This currency no longer acts like a chain pump on
 
 444 THE PRESENT AND THE FUTURE 
 
 our gold reserve, but gold is being returned to secure the cur- 
 rency. This movement will become more marked when the 
 revenues have again grown to exceed our expenditures, for 
 the supply of the currency has been cut off, and for the needed 
 expansion we must depend upon the national banks and the 
 increase in our gold stock. For nearly twenty years the gov- 
 ernment of the United States carried on a limited coinage of 
 silver to save itself from a threatening sentiment for unlimited 
 coinage. It had repeatedly gone to international monetary 
 conferences as a suppliant, always on the point of being forced 
 by its people to undertake alone that for which it asked Euro- 
 pean co-operation. Europe has naturally waited while we 
 absorbed most of our own production of silver in the expecta- 
 tion that we would settle its monetary troubles by absorbing 
 more. 
 
 Even if we should unwisely continue to importune Europe 
 in behalf of bimetallism, we, at least, stand in a more com- 
 manding position, and our only mistake can be made in sur- 
 rendering it to satisfy those who argue that an American initia- 
 tive is all that is needed to induce European states to adopt 
 bimetallism, and that free coinage of silver would give us com- 
 mand of the Asiatic markets. The adoption of the silver 
 standard by the United States, and that is what the unlimited 
 coinage of silver by us alone means, is exactly what European 
 creditor nations seek as a means of enabling them to maintain 
 an appreciating gold standard. They have no fear of our 
 monopolizing the Asiatic markets so long as they can compel 
 the payment of deferred obligations in gold, or at a rate of 
 exchange requiring silver nations to make up the difference 
 in the value of silver and gold. They have never failed to ap- 
 preciate the advantages of a gold standard, if other and es- 
 pecially the great debtor nations were kept upon a silver basis. 
 Neither have they failed to appreciate the dangers of the situa- 
 tion if these productive debtors sought for gold.
 
 THE DRIFT TOWARDS THE OOLD STANDARD 445 
 
 But these debtor nations could not be kept in their seats. 
 The movement for the gold standard once started must con- 
 tinue on in its inevitable course. If accidental conditions pro- 
 duce a discord in the coinage of the world, commerce will not 
 forever brook it, and governments in the stress of making up 
 their budgets will not rest content. So nations which have been 
 pleading for the restoration of silver have one by one adopt- 
 ed the gold standard, or have become well advanced in the 
 process. 
 
 The Austrian reform is nearly complete, our recent losses 
 in gold having been to her great advantage. Russia has also 
 profited by our Iosses 2 and, though loaded with debt, has 
 adopted gold. Japan follows her victory over China, as Ger- 
 many did hers over France, by establishing the coveted stand- 
 ard. Even the little republics of Costa Rica and San Salva- 
 dor have recently joined the procession, and the South Ameri- 
 can states are showing a strong desire to fall in behind Chili, 
 which adopted gold in 1895. The demands thus created, how- 
 ever, have not fallen entirely upon the United States. Eng- 
 land has grown no richer in the yellow metal, though com- 
 manding so many sources of supply. The gold in the Austro- 
 Hungarian bank now exceeds that in the Bank of England, 
 and the Bank of France holds more than both, while the im- 
 mense chest Russia had filled is regarded as anything but an 
 offering to peace. 
 
 The natural conclusion from the general movement tow- 
 ards a gold standard is that governments are seeking advan- 
 tages which they cannot find in adhering to silver. In their 
 development they need capital, but the collection of taxes in 
 silver for the payment of foreign obligations in gold, in view 
 of the disparity in the value of the metals, imposes a burden 
 on the government, though for all the purposes of internal 
 trade and industry the silver standard, or even a basis of in- 
 convertible paper, may have occasioned no apparent incon-
 
 446 THE PRESENT AND THE FUTURE 
 
 veniences among the people, may even have seemed to some 
 a blessing. 
 
 There is a distinction to be carefully noted between the 
 requirements of the government and those of the people gov- 
 erned. The native of India, for example, has found no fault 
 with his depreciated rupee till recently. It is claimed that 
 Japan has prospered greatly by its long use of silver, and in 
 changing to a gold standard the government has been com- 
 pelled to change its gold coins to correspond with the gold 
 value of the silver coin previously the standard; the value of 
 the gold in the gold yen having been reduced one-half. It is 
 doubtful if the people would have tolerated the reverse opera- 
 tion. 
 
 The difficulty of at once raising the standard of value to 
 which the people have become accustomed is evident from the 
 experience of Russia. It was made known by imperial edict 
 that a 5-rouble gold piece would, until further notice, be equal 
 to 7 roubles and 50 copecks in paper currency, so that a 
 check drawn on a Russian bank for 75 roubles might be con- 
 sidered paid should the holder receive 50 roubles in gold. But 
 when the peasants were offered a 5-rouble gold piece in pay- 
 ment of a debt due them for 7 roubles and 50 copecks, they re- 
 fused to accept it, pointing out that stamped upon it in plain 
 Russian were the words " 5 roubles." They naturally de- 
 manded to know why they were expected to believe that twice 
 two and a half made 7 roubles and 50 copecks in money or 
 anything else. As an indication of how easily such difficulties 
 are overcome in Russia, it is reported that the government 
 has recoined the same 5-rouble gold pieces and stamped on 
 them " 7 roubles, 50 copecks." 
 
 Japan and Russia, therefore, have attempted to adopt the 
 gold standard on the basis of their previously depreciated cur- 
 rency. Such a method will not probably cause any inconven- 
 ience in internal transactions, as the engagements and contracts
 
 THE FINANCIAL POLICY OF JAPAN 447 
 
 have been made on the silver or paper basis, but its operation in 
 foreign transactions remains to be developed. 
 
 How, it may bo asked, is the government of Japan to derive 
 any benefit from the gold standard in the payment of foreign 
 obligations in gold countries if the yen is still to be reckoned at 
 its silver value ? Must not the same amount of money, as re- 
 lated to the price of commodities, be raised in taxes to settle in 
 gold abroad? Undoubtedly the amount required will be as 
 great so long as silver falls no lower, but the Japanese have at 
 least fixed a stable par of exchange with gold countries by mak- 
 ing the standard gold instead of silver. If silver falls, the re- 
 duced gold yen will still be a fixed measure of value, and the 
 silver currency, so long as the government redeems in gold, 
 must take the place of a token currency. Moreover, the credit 
 of Japan in gold countries will be strengthened. That is evi- 
 dently the objective point. Foreign capital will be more 
 readily obtained and on better 'terms. 
 
 The Japanese financiers are of a high order of intelligence 
 and economic education, and they have the management of 
 their currency in their own hands. If they have other motives 
 in adopting the gold standard they arc not plain. It is, how- 
 ever, implied in the following from the Japan Weekly Mail 
 of March 6, 1897, that they are making 110 calculations upon 
 the further decline of silver, and are actuated by motives of a 
 different character: 
 
 " As we understand, Japan's change to gold monometallism is 
 dictated chiefly by the conviction that silver has reached virtually its 
 lowest point, and that its sterling price may be expected to appreciate 
 largely within the next few years. Her financiers would, probably, 
 decline to reckon the chances of precisely the opposite contingency. 
 They are fully sensible of the great advantages that their country's 
 industry and commerce have derived from the employment of a cur- 
 rency constantly depreciating in terms of the currency of the markets 
 where they sell their commodities. But they think that they have 
 drunk the depths of that well of prosperity and that the time has 
 now come to guard themselves against the upward swing of the 
 silver pendulum. In short, they have been made rich by silver 
 that cheapened steadily in terms of gold, and now, thinking that the 
 Occident inclines toward bimetallism, they want to be made richer
 
 448 THE PRESENT AND THE FUTURE 
 
 by gold that cheapens steadily in terms of silver. It has been said 
 that Japan is the child of fortune. If this new experiment succeeds, 
 who can deny her right to the title? " 
 
 It would be unsafe to take this as representing the real 
 opinion of the Japanese financiers, at least before making 
 sure that the statement had not behind it a certain prejudice 
 for the old silver standard, or for the doctrine of international 
 bimetallism. Indeed, the same journal suggests that possibly 
 a stronger reason for the step is that her financiers wish to place 
 Japan within reach of the stores of cheap capital awaiting 
 investment in the Occident. Her financiers have seen enough 
 of Indian affairs to convince them of the difficulty of collect- 
 ing taxes in silver to pay debts in gold at uncertain rates of 
 exchange. Japan has started out to make herself a great mari- 
 time power, and this requires money. 
 
 If the world drifts along without the inauguration of an 
 international policy as to monetary standards, the end of silver 
 demonetization is not yet, nor is it safe to say, even with greatly 
 increased gold production, that a scarcity of the yellow metal 
 is an experience only of the past. The backward nations are 
 coming forward rapidly. If they have prospered under a de- 
 preciating currency, they have also learned that such pros- 
 perity has its limits, and that, while it exists, its fruits must 
 more and more be torn from the hands of the producers to 
 satisfy the requirements of the budget. The people may pro- 
 ceed a long time in the belief that they are reaping a great 
 profit from selling in gold countries, and they may submit fre- 
 quently to new burdens of taxation, but the rulers perceive 
 in this an element of grave danger. A poor harvest, or a sud- 
 den fall in exchange may create a deficit, and the government, 
 before devising fresh taxation, must borrow. So, little by 
 little, a foreign debt grows up, and the government appreciates 
 that the time must inevitably come when all the possible com- 
 pensations derived from increased production and exports, be- 
 cause of a depreciating standard, must be confiscated in taxa-
 
 FINANCIAL AND COMMERCIAL SITUATION IN MEXICO 449 
 
 tion to satisfy the foreign creditor. How long will the people 
 remain satisfied? 
 
 It is necessary to study this matter closely, for of late an 
 opinion has grown up among discouraged bimetallists that, 
 even if the free coinage of silver should result in a fall to a 
 silver standard, it would only lead to greater prosperity in such 
 a producing country as the United States. If this theory were 
 sound we should hardly expect to find silver nations seeking to 
 adopt, the gold standard. The theory seems in a degree plausi- 
 ble, and therein lies its danger. Mexico may be taken as a 
 country which has undoubtedly enjoyed a fair degree of pros- 
 perity of late years under a silver standard. It has been the 
 great silver producer of the world, and so long as silver and 
 gold maintained a tolerably stable relation, silver was the main 
 article of export ; even her own currency became contracted, so 
 much silver was required to pay for imports. But as silver de- 
 preciated the production and export of other merchandisa was 
 stimulated, for the expense of producing, which was paid in 
 silver, enabled producers to sell in gold countries at very lucra- 
 tive prices when converted into silver at high rates of exchange. 
 How this condition of things has developed the export of Mexi- 
 can agricultural products is revealed by the fact that the total 
 exports for several years up to 18G9 were about $20,000,000; 
 in the year 1872-73 they amounted to $31,594,000; in 1888- 
 89 they swelled to $60,158,000; in 1891-92 to $75,467,000, 
 and in 1892-93 to $87,509,000. 
 
 The fall in silver has also stimulated Mexican manufact- 
 ures, because foreign manufactures have to be paid for in 
 gold, and the rate of exchange is so high that it pays to manu- 
 facture at home. Some American manufacturing plants have 
 actually been taken to Mexico. It is also claimed that, as every 
 gold dollar is converted into two silver dollars when sent into 
 Mexico, the investment of foreign capital in the country is en- 
 couraged, for when invested in producing commodities to be 
 29
 
 450 THE PRESENT AND THE FUTURE 
 
 sold in gold countries, like coffee, for instance, the profits to 
 investors is large. 
 
 If this were accepted as the whole story we might at once 
 assume that a depreciating standard is a good thing, but Mexi- 
 can financiers are beginning to realize that while the country 
 has been enjoying a period of good government and prosper- 
 ous production and trade, such a condition cannot last indef- 
 initely. 
 
 The reduction of imports because foreign products almost 
 duplicate their price when sold in silver, and because the con- 
 stant fluctuation in exchange makes it uncertain what the 
 value of commodities will be when the time for payment ar- 
 rives, diminishes in proportion the revenue of the government 
 which until recently was mainly derived from import duties. 
 At the same time, national expenses have greatly increased, 
 and part of the increase is due to increased payment in gold of 
 interest on the national debt and such expenses of minor ac- 
 count as the salaries of consular and diplomatic officers. Im- 
 port duties are already so high that they do not admit of fur- 
 ther increase, and it has been found necessary to greatly in- 
 crease the burden of direct taxation. Still, expenditures will 
 often exceed revenue. Even if the people are prosperous, the 
 government finds that it has nearly reached the point beyond 
 which more taxation would at least be unpleasant. 
 
 Railroads are also badly affected, for, while collecting their 
 fares and freights in silver, they must pay in gold the interest 
 on their securities, and for such foreign articles as they need 
 in their equipment. The result is a further burden on the 
 production of the country. 
 
 M. Romero, the Mexican Minister to this country, in an 
 article in the North American Review in 1895, was inclined 
 to take the view that the advantages derived from the use of 
 silver money fully compensated for, if they did not overcome, 
 the disadvantages. "Notwithstanding all this," he added,
 
 THE PLIGHT OF INDIA 451 
 
 " we would like to see silver commanding the same price as 
 before it was demonetized in 1873, and we think the world 
 has to come back sooner or later to bimetallism as the only way 
 to have a more stable level of values and to avoid most of the 
 financial, troubles which the commercial nations of the world 
 are now so keenly suffering." The inference is not obscure. 
 If the advantages of a depreciating currency were so marked, 
 why should silver countries wish to throw them away for the 
 sake of seeing silver commanding its former price? Govern- 
 ments are not controlled by sentiment. They realize the fatal 
 consequences of that prosperity which compels them to exact 
 from the producing masses all that stimulated industry gives 
 them. For a time a people may complacently pay over to the 
 government money which seems to come easier than ever 
 before, but the governments know that there must come a 
 time when the deficits occasioned by the requirements of the 
 creditor's appreciated currency cannot be so remedied with im- 
 punity. The practice leads to repudiation or revolution. 
 
 We need seek no better reason why Austria-Hungary, at 
 great expense and labor, sought the gold standard when, ten 
 years before, it could have resumed specie payments on a silver 
 basis, the depreciation in silver having brought it to a par 
 with the paper. It shows why Japan, after a prosperous season 
 on a depreciating standard, availed herself of the earliest oppor- 
 tunity to adopt the gold standard, and Mexico would not hesi- 
 tate if she could secure the gold. As yet. it is impossible, for 
 her exports are not yet sufficiently large to enable her to buy 
 gold. Her time will come unless the present tendencies are 
 checked. 
 
 No silver country is in such a plight as India, and her 
 plight is England's concern. In studying her situation as 
 compared with that of such countries as Mexico, due attention 
 must be given to differences in political conditions, while bear- 
 ing in mind also the distinction, already alluded to, between the
 
 452 THE PRESENT AND THE FUTURE 
 
 government which makes the budget and the producing people 
 who handle the currency. Mexico is a country of recently 
 marked development under an independent government of the 
 republican type. India, comprising nearly a fifth of the 
 human race, is subject to a government of those whom we are 
 pleased to call enlightened foreigners, with a small military 
 force at hand. Commercial England regards it as her business 
 to make money out of India. Patriotic Mexicans regard it as 
 their business to make a peaceful and prosperous nation out 
 of the Mexicans. Since the days of unsuccessful imperialism 
 Mexico has developed herself under natural conditions as a 
 republic. India has been developed as a dependency by money- 
 making foreigners. The English governors in India have 
 borrowed of English capitalists for the public improvements, 
 which have greatly increased the material power of the Indian 
 nation, but England's motive was commercial, not patriotic. 
 Here were nearly three hundred millions of people to trade 
 with, to buy English manufactures, to borrow English money, 
 to pay interest on it, and to pay dividends on investments. 
 
 Under the conditions as to gold and silver during the past 
 twenty years, the capitalist has demanded his interest in ap- 
 preciating gold, while the native has paid his taxes in depre- 
 ciating silver. The added compensation which a people pro- 
 ducing on a depreciated basis has found in selling in coun- 
 tries on an appreciated basis has had the double effect of injur- 
 ing the producers in England who deemed it their right 
 to sell in India, and of enhancing the profits of the English 
 capitalist and money-changer. Thus we can discover why the 
 English producer has become an advocate of bimetallism while 
 the banking and investing portion of the English people have 
 clung desperately to gold monometallism. Even Christians 
 are seldom unselfish. 
 
 For twenty years the fruition of Indian development has 
 passed into the hands of the English capitalist, who has in-
 
 TAXING INDIA IN SILVER TO PAY DEBTS IN GOLD 453 
 
 vested in India, and who has exacted his pound of flesh whether 
 harvests were good or bad, in famine or in plenty. Little by 
 little, as silver has declined in value in England, though not 
 in India, the English governors, acting as the instruments for 
 the payment of the debt to England, have found themselves 
 settling into a difficulty. To make up for the depreciation of 
 the legal tender of India in terms of the legal tender of Eng- 
 land, they have imposed new taxes on the people of India. 
 For a long time the imposition of import duties, so obnoxious 
 to the English producer, who wished no restrictions upon his 
 power to sell, was resisted, but recently it became necessary. 
 So that now the government finds itself at that point where, 
 unless exchange is kept stable and all improvements of the 
 country stop, it must face a recurring deficit and the impossi- 
 bility of laying more taxes without stripping the natives of 
 the little wealth they have accumulated. The process has not 
 been hindered by any squeamishness as to stripping them of 
 the wealth they have recently produced. 
 
 In 1892, Lord Ilerschell's commission, after reviewing all 
 the suggestions for increased taxation as a means to counter- 
 balance the fall in exchange, concluded that the further impo- 
 sition of direct taxes would be dangerous, while import duties 
 would be distasteful to English traders. That source of relief 
 was discarded, and the attempt to produce a monopoly value 
 in the legal-tender currency of the natives adopted instead, as 
 the least liable to excite their suspicions, but now it has been 
 found necessary to impose the taxes as well as to monopolize 
 the rupee. 
 
 The net amount obtained from the imposition of the salt, 
 income, and custom taxes for the fiscal years 1894-95 is given 
 as follows: 
 
 Salt tax Rs. 81.670,000 
 
 Income tax Rs. 17.780.000 
 
 Customs tax, Rs. 30,800,000 
 
 Total, . . . Rs. 136,250,000
 
 454 THE PRESENT AND THE FUTURE 
 
 The average loss because of the depreciation of silver in re- 
 mitting the home charges, that is, in paying the English cred- 
 itor, has been about 130,000,000 rupees annually. In other 
 words, but for the depreciation of silver these three forms of 
 taxation might almost be dispensed with. 1 
 
 The poverty of the Indian nation, perhaps, deserves a word 
 in view of what silver advocates have said of its prosperity 
 under a depreciating silver standard. Some impression of it 
 may be gained from the fact that an income tax falling as low 
 as on incomes of 500 rupees, and at the average rate of about 
 5f pence per pound, yields but about 17,780,000 rupees in a 
 population of nearly 300,000,000. This might naturally be 
 expected in a nation where the circulation per capita is less than 
 six rupees in the coinage, of which the government holds a 
 monopoly. 
 
 1 Concerning the nature of these taxes, we may quote from a re- 
 cent article in the North American Review, by Prof. A. S. Ghosh, of 
 the Calcutta University. He says: 
 
 " In India salt is a government monopoly, as it was in France 
 before the Revolution. The effect of the monopoly is to raise the 
 price to the consumer some 2000 per cent, above the free market 
 price. This is a heavy burden on the poorer classes, whose daily 
 meal invariably consists of a handful of rice, or some other grain, 
 Havored with a little salt. The government preserves its right to 
 this monopoly by the most stringent laws, as was also done in France 
 before the Resolution. The writer has personally met with a few 
 cases where some famine-stricken people utilized a little salt scooped 
 out of the sand on the seashore after the tide had receded, in order 
 to cook some wild vegetables gathered from the jungle. For this 
 crime a fine of two rupees was imposed by the magistrate, or a short 
 term of imprisonment as an alternative the latter being joyfully 
 preferred by the delinquents as being, at least, a guarantee against 
 starvation. 
 
 " Income Tax. This is a tax on incomes from all sources at the 
 rate of 4 pies in the rupee (?. r., in the same proportion as 5d. in the 
 pound) on incomes between 500 rupees and 2000 rupees per annum, 
 and at 5 pies in the rupee (/. e., as (>y(1. in the pound) on incomes of 
 2000 rupees and above. This tax is understood to be only a tempo- 
 rary measure, rendered necessary at present by the critical financial 
 condition of the government. It presses very heavily on the lower 
 middle classes because of its low incidence. 
 
 " Customs. This is a duty on all imported goods at an average 
 rate of 5 per cent, of their value except certain commodities which 
 come under sumptuary laws, and which are reckoned at a higher 
 rate."
 
 RESULTS OP THE RUPEE VACUUM 455 
 
 England's government of India has now simply settled 
 down to the question of taxing this poverty-stricken popula- 
 tion to the utmost to pay English creditors. Public improve- 
 ments are out of the question. If any borrowing is done it 
 must be to pay the interest on debts already incurred. That 
 has been frequently resorted to even in times of Indian pros- 
 perity, and, of course, the burden has been thereby increased, 
 while the magnitude of the ultimate collapse of such a policy 
 is ever growing. The stability of exchange depends upon the 
 degree of the blight on the currency. There is a limit beyond 
 which even the most abject humanity will not go. Such peo- 
 ple are sometimes the most dangerous when once aroused. 
 
 It has been recently assumed that the effort to raise ex- 
 change by creating a rupee vacuum has succeeded at last, but 
 apparently the government does not care, or dare, to sell bills 
 at the fixed rate. Even though the currency has been disas- 
 trously contracted, the sale of bills at Is. 4(7. would naturally 
 result in further imports of silver, considering its low price, 
 and such imports of silver though demanded for the good of 
 the people, would not simply endanger the vacuum and the 
 stability of exchange, but prevent the sale of council bills. 
 They must be sold at a low rate in spite of the contraction. 1 
 
 i " Now that the mischief of closing the Indian mints has been 
 done, and the people of India have suffered, some irreparably, and 
 the result aimed at has been reached, viz., the shrinkage in the 
 volume of the Indian currency, it passes all human understanding 
 to know why the authorities still take less than the full legal value 
 of the rupee (Is. 4d.) in the sale of India Council bills. During the 
 first six months of this year the stringency of the Indian money 
 market was so great that banks in India were refusing to give loans 
 at 10 per cent., even on government securities, and. consequently, the 
 authorities might have sold India Council bills to English bankers 
 who had to make remittances to India at even a small premium 
 above the legal rate of 1s. 4d. per rupee. But during all that time 
 these bills were offered at an average rate of 1ft. 2y 2 d. per rupee, 
 thereby conferring a clear profit of over 10 per cent, on EngMsh 
 bankers as a free gift, at the cost of the famine-stricken people of 
 India." Prof. A. S. Ghosh, Calcutta University, North American 
 Review, October, 1897.
 
 456 THE PRESENT AND THE FUTURE 
 
 Another famine lias been decreed in this land of poverty- 
 stricken millions, a part of the English empire. Heretofore 
 during such seasons the natives could draw upon their little 
 hoards for the bare necessities of life, or could take their silver 
 ornaments to the mint and have them coined into the legal 
 tender of the land. Every bangle of the Indian women had a 
 value in time of distress. But now the mints are closed, and 
 the native finds that his treasure has lost much of its value. 
 To steady exchange, to aid the foreign government in satisfy- 
 ing the foreign creditor so as not to further tax a people al- 
 ready stripped of all they produced, enlightened England has 
 put her foot on the currency of a people in her keeping, of a 
 people whose empress is England's queen. This is the fact, 
 which, under the stress of famine, the Indian people are be- 
 ginning to realize for the first time. The immediate future of 
 India will be worth watching. Events never fail in their logic. 
 
 Here is England's interest in silver. Xo other nation on 
 the face of the earth is so vitally concerned, no other govern- 
 ment is so seriously affected by the decline in the value of 
 silver. This is one of the reasons why bimetallism thrives in 
 England, notwithstanding the resistance of those who profit 
 from the loans. Meanwhile, according to recent advices, the 
 Lancashire industries are sinking lower and lower, a reduc- 
 tion in wages is demanded, and bimetallism is more and more 
 becoming a test in parliamentary elections. Katurally, the 
 government has stood ready to make concessions to secure open 
 mints to silver in France and the United States. That would 
 help the Indian government and home production and leave 
 conservative finance satisfied. 
 
 But in the interest of international bimetallism this is what 
 the United States should say to England : " We appreciate 
 your delicate and exceptional situation. We have often asked 
 you to enter with us into a bimetallic agreement; your own 
 great colony of India has pleaded with you to do so; your
 
 OUR PROPER POSITION TOWARDS ENGLAND 457 
 
 once thriving manufacturers have interceded also. You have 
 always declined lest it should imply a dissatisfaction with your 
 standard of value. For years you have been willing, anxious, 
 eager, that we should open our mints to silver. Your monome- 
 tallic statesmen have surpassed our own silver advocates in 
 predicting that we could ourselves alone establish a stable ratio 
 between the metals. In your anxiety you have admitted nearly 
 every claim that bimetallism has made, but have still declined 
 to enter into a practical agreement with us. Germany has 
 stood ready, if you would but lead the way, or, if not leading, 
 would simply assent. Xow, we have decided to wait till you 
 are ready. France has already acquired a large stock of gold 
 and can acquire it more easily than you. The United States 
 will now proceed to acquire the precious metal. You are aware 
 of our opportunities in that line if they are improved. We 
 are the largest producers, and the gold from your jSTorth 
 American possessions is coming to our mints. "With the feel- 
 ings of enlightened humanity we deplore the distress in 
 famine-stricken India, and we have been raising a considerable 
 sum for the relief of your subjects. The failure of crops in 
 Europe we cannot but regard as a human calamity, but if 
 Providence is kind to Xorth America, uniformly gives us a 
 good climate, and frequently is unkind to Europe and Asia, 
 it is our fortune, not our fault. "We can help you, for we have 
 a large crop of cereals, and, of course, you will require a large 
 quantity. The price of wheat will be about a dollar a bushel 
 other cereals accordingly and we shall expect you to pay 
 in gold, which must remain our standard of value till you are 
 ready to co-operate with us to secure something better. "We 
 expect that the market will maintain this price for wheat at 
 least three years, for one short crop in Europe and India means 
 that it will require three years to again produce a comfortable 
 available surplus. "We have recently increased our tariff in 
 the hopes of a larger revenue, which, we expect, will aid us in
 
 458 THE PRESENT AND THE FUTURE 
 
 keeping what gold we secure and produce. We have stopped 
 silver purchases, and the increasing business of our people will 
 doubtless require the added gold in our currency. We notice 
 that some is actually coming to us from Australia to settle 
 balances, though this has usually gone to London. You re- 
 member the years 1880 to 1883, when European crops were 
 short, when the rate of the Bank of England was kept incon- 
 veniently high, when your mint in the course of a whole year 
 coined only as much gold as ours averaged every working 
 day, while a surplus of bullion remained beyond their capacity. 
 We should have kept that gold had we not by currency laws, 
 which hurt us less than they helped you, made it easier for 
 you to secure the gold you required here than elsewhere. 
 We are not coining silver now, and we do not intend to till 
 there is an international agreement, for bimetallism under 
 which your mint stands open to it and the Bank of England 
 treats it as has the Bank of France. Our people by a 
 large majority prefer bimetallism to a gold standard, not be- 
 cause we produce silver, for the value of our silver product is 
 less than that of our gold product, and is insignificant beside 
 the value of our farm products; but they have concluded to 
 cease pleading for bimetallism and voting for free silver, and, 
 while we should much prefer to treat with you at once for puro 
 international bimetallism, we consider it best to assume for 
 the present " an attitude of expectancy." To be sure, there is 
 a great increase in the production of the yellow metal, but we 
 hope to be able to take care of what is produced on this side, 
 including your Northwest Territory, and the total increase is 
 as yet, perhaps, no more marked than the increase in the num- 
 ber of nations stretching out their hands for it. If you prefer 
 to send back some of our securities in exchange for cereals and 
 cotton, and can induce your capitalists to part with them for 
 such securities as India or your other colonies afford, we will 
 willingly take them, for they will reduce just so much our nee-
 
 THE WOLCOTT COMMISSION 459 
 
 essary annual remittance in interest, and tend in the end to 
 your larger remittances to us of gold. We say this in all 
 kindness, and would much prefer not to say it at all or to seem 
 to enter upon a commercial contest of this character, but our 
 interests as a nation and as friends of bimetallism, we think, 
 require it." 
 
 If we are a nation of believers in the virtue of genuine 
 bimetallism, this, as I read history and the present conditions, 
 would be the thing to say to England. There appears no more 
 reason for the belief that Europe would follow us if we opened 
 our mints to silver than there did ten or twenty years ago. If 
 there were any chance of the passage of a free-silver bill in 
 Congress to-day, neither England nor the Continental nations 
 would move a step. 
 
 While this view has long been held by the wisest bimetal- 
 lists here and abroad, recently a class have come to regard it 
 as old-fashioned. At the last annual meeting of the English 
 Bimetallic League at Manchester, in June, 1897, it was ap- 
 parent that the United States were expected to take the ini- 
 tiative. Lord Aldenham (Henry Hucks Gibbs), while con- 
 sidering the feeling expressed by the unanimous vote in the 
 Commons, and the promise of the Chancellor of the Exchequer 
 to render all the assistance possible in a settlement of the ques- 
 tion, as marked signs of progress, added that the object of bi- 
 metallism would be gained if the United States or France, or 
 some other great commercial nation, would carry the matter 
 through without England, and he thought the United States 
 meant to do it if possible. That was his interpretation of the 
 Wolcott Commission, which was appointed by President 
 McKinley in April, agreeably to the demands of the Republi- 
 can platform. This commission, consisting of Senator Wol- 
 cott, of Colorado, ex-Vice-President Stevenson, of Illinois, and 
 General Paine, of Massachusetts, during the summer of 1897, 
 carried on negotiations with the governments at London, Ber-
 
 460 THE PRESENT AND THE FUTURE 
 
 lin, and Paris for the basis of another conference looking to a 
 convention or agreement for the restoration of silver. Those 
 who ridiculed the mission of these gentlemen underestimated 
 the strength of bimetallism in Europe or, at least, of the 
 desire to have something done for silver as much as the 
 European bimetallists as well as monometallists overestimated 
 the anxiety in this country to do something for silver. Not- 
 withstanding our appearance at our old pastime of importun- 
 ing Europe, Europe was waiting anxiously to be importuned, 
 and was considerably less secure in her attitude of expectancy 
 than heretofore. 
 
 The English Chancellor of the Exchequer had pledged 
 himself to Parliament to do all in his power to bring about 
 an agreement guaranteeing a stable power of exchange. The 
 Commons made this practically a demand upon the govern- 
 ment by unanimous vote. The Royal Commission appointed 
 in" 189 3 to inquire again into the depression of agriculture 
 issued during the summer a final report dealing solely with 
 the evidence submitted for and against a change in the Eng- 
 lish monetary system as a remedy for depression. It was 
 signed by ten of the fourteen commissioners, and among its 
 conclusions was this : 
 
 " That if an international arrangement were made for the open- 
 ing to silver of the mints abroad and in India, and its restoration 
 either wholly or partially to the position it filled prior to 1873, 
 it would be of the greatest benefit to the agricultural industry, and 
 that the English government should heartily co-operate with foreign 
 powers in promoting a conference to bring about this result, and 
 thereby give effect to the unanimous resolution in the House of Com- 
 mons passed in February, 1895." 
 
 The Erench government, now composed of some strong 
 members of the Bimetallic League, was quite ready to promise 
 a full co-operation with the United States at the ratio of 15-J 
 to 1. On this point, of course, the American commissioners 
 could give no definite assurances. The supreme foolishness of 
 the adoption of the ratio of 16 to 1 in 1878 ought to be plain
 
 THE COMMISSION'S PROPOSITION TO ENGLAND 461 
 
 now to even the silver men who were so largely responsible 
 for it. 
 
 The propositions made to the English government were in 
 the main as follows: The opening of the Indian mints to the 
 free coinage of silver; the repeal of the order making the sover- 
 eign a legal tender in India; the placing of one-fifth of the 
 bullion in the Issue Department of the Bank of England in 
 silver; the raising of the silver legal tender from 5 to 10; 
 the issue of 1 notes based upon silver; the retirement of the 
 half-sovereign of gold and the substitution of paper therefor 
 based upon silver; an agreement to coin annually a sum 
 not named in silver or the purchase of a sum not named 
 in silver annually; the opening of the English mints to the 
 coinage of rupees and the British dollar, which shall be a 
 legal tender in the Straits Settlements and other silver colonies, 
 and in Great Britain up to the limit of the silver and legal- 
 tender action by the colonies, and the coinage of silver in 
 Egypt, and finally an agreement upon something having the 
 general scope of the Huskisson plan. 
 
 Conferences were held at the Foreign Office on July 12 
 and 15 to discuss the proposals with the American envoys, the 
 French Ambassador participating in the discussion. France 
 announced her willingness to open her mints to unlimited free 
 coinage of silver at a ratio of 15^ to 1 if Great Britain would 
 co-operate with her, as in the plan stated. Senator AVolcott 
 announced that the United States government was inclined 
 to accept this ratio, upon which France insisted. 
 
 Baron de Courcel, the French Ambassador, suggested 10,- 
 000,000 as the sum of the British annual purchase of silver to 
 fill the blank in the proposals, and Senator AVolcott approved 
 the suggestion. Sir Michael Hicks-Beach announced that the 
 heads of the government of Great Britain were unanimous 
 in their refusal to open the English mints to the free coinage of 
 silver, but were disposed to co-operate in other ways.
 
 462 THE PRESENT AND THE FUTURE 
 
 This was very apparent. The English government, while 
 disposed to go no further than necessary, was prepared to go 
 further than ever before. The promptness with which the 
 Bank of England signified its willingness to keep a fifth of its 
 reserves in silver came as a surprise to many who had evi- 
 dently forgotten that the bank had stood ready to do this for 
 fifteen years in order to induce France and the United States 
 to open their mints to silver. 
 
 The question of the reopening of the Indian mints was re- 
 ferred to the Indian government, w T hich, on September 16, 
 returned a long and elaborate argument culminating in a 
 unanimous recommendation to refuse to entertain the sug- 
 gestion. This was, perhaps, as much a surprise to the bimetal- 
 lists of England, as was the willingness of the bank to hold 
 silver in its reserves to the monometallists. But a government 
 in India's desperate condition, with a frontier war and a famine 
 on hand, might be expected to hold to the expedients in prac- 
 tice, no matter how unsatisfactory, unless abundant grounds 
 for improvement in other directions were absolutely insured. 
 Its advisers expressed this fear in their reply, and intimated that 
 an assured basis for stable exchange must be provided before 
 the opening of the mints could be considered. The financial 
 advisers have always complained more of the instability of ex- 
 change than of the real decline in silver, and now that a higher 
 degree of stability has been acquired by contracting the cur- 
 rency they are inclined to minimize the evils which may come 
 from such a contraction, though the remedy they persist in 
 may prove worse than the disease. 
 
 It is not altogether unlikely, moreover, that the action of 
 the Indian government and the final endorsement by the home 
 government may have been influenced by the bimetallic argu- 
 ments already referred to concerning the desirability and the 
 probability of American initiative. This sentiment is re- 
 flected in this country by such bimetallists as President An-
 
 RENEWED ANXIETY IN EUROPE 463 
 
 drews, of Brown University, who recently said that if we would 
 reopen our mints France was certain to follow. 
 
 France certainly will not follow unless we reopen our mints 
 at the ratio of 15.50 to 1. She insists on this and always has. 
 Bimetallism can never result from our "16 to 1 silverism." 
 
 While the unfavorable action of the Indian government 
 destroyed the prospects of an immediate conference with the 
 great powers, the United States commissioners did not re- 
 nounce hope, but continued their efforts. President Mc- 
 Kinley, in his message to the Fifty-fifth Congress, spoke of the 
 gratifying action of France in joining this country in an at- 
 tempt to bring about an agreement for a fixed ratio, and stated 
 that our special envoys believe that the question may yet be 
 solved by further negotiations. 
 
 In seeking bimetallism the question for us is not how far 
 England will go for the sake of inducing the United States to 
 reopen their mints, but how long England will continue in its 
 present attitude if the United States stop begging and plead- 
 ing and voting for free silver, and go to work earnestly, as 
 Count von Mirbach expressed it, to secure and to keep gold. 
 
 The European nations do not fail to recognize the diffi- 
 culties which such a policy in the United States would impose 
 upon them. This is the reason for the recent movement in 
 Austria for a commercial union against this country, a senti- 
 ment which was also reflected in a recent debate in the Budget 
 Committee of the German Reichstag, when Dr. Hammacher 
 urged the necessity of such a union of Continental powers. 
 The situation is similar to that of 1882, when the " Central 
 European Zollverein " was proposed, except that the United 
 States are now more advantageously placed, having ceased the 
 coinage of silver. The anxiety is shown in the recent course 
 of the Bank of England in restricting its loans and actually 
 borrowing from the open market. English bills have even 
 been discounted for English houses in Uew York. Such ex-
 
 464 THE PRESENT AND THE FUTURE 
 
 pedients cannot avail for any length of time. Europe must 
 take our cereals or reduce the efficiency of its people and breed 
 a discontent which might seriously shake the thrones. For 
 Europe to undertake to depend exclusively on the grain fields 
 of Austria-Hungary, when American wheat is being sold on 
 the Vienna market for Austria's own needs, and when Indian 
 producers are being squeezed by a monopolized currency, 
 \vould be suicidal. Europe would have a violent time in with- 
 holding bread from the people in order to hold its gold and ex- 
 pedients to postpone the settlement for our grain, such as seem 
 to be practiced by the Bank of England, must only aggravate 
 the settlement when it comes, unless the United States should 
 foolishly throw away their opportunity. Europe will not 
 cease to hope for such foolishness on our part, but when she 
 finds that we mean to pursue the advantage which our rich 
 heritage has given to us, there will be a monetary conference 
 very different from any we have seen. We shall not be com- 
 pelled to wait long if we let the currency alone and devote our- 
 selves strictly to business. Herein lies the possibility of inter- 
 national bimetallism. 
 
 Unfortunately, those in this country who have had a 
 sincere desire for the rehabilitation of silver have been its 
 worst enemies, because of a failure to appreciate the conditions 
 abroad, and the dangers of this form of indiscretion may not 
 be entirely over yet. It is noticeable that this new idea of ac- 
 complishing bimetallism through the initiative of the United 
 States began to develop among the silver men after the failure 
 of the conference of 1892. Great stress has been laid on the 
 apparent prosperity of countries on a silver basis. India, 
 Japan, and Mexico have even been used as examples of what 
 the silver standard can do. It has been claimed that on a sil- 
 ver basis we could secure the trade of Asia, and could at the 
 same time compete better with Asiatic products in Europe. 
 It was but a step from this to the theory that if we opened
 
 FUTURE PRODUCTION OF GOLD 4C5 
 
 our mints England would, to save her Indian and Chinese 
 trade, hasten to adopt bimetallism. Such is the " new fash- 
 ioned " idea of the way to do it, and since the defeat of Bryan 
 and the evidences of a remarkable increase in the production of 
 gold the idea has extended to more judicious economists, dis- 
 appointed, if not discouraged, at the long delay of the accom- 
 plishment of that doctrine in which they have such an en- 
 thusiastic faith. 
 
 To some the recent evidences of enormous gold produc- 
 tion, the recent decline of silver to its lowest point, and the 
 recent rise in the price of cereals appear as severe blows to 
 the bimetallic cause. The scarcity of gold has been one of the 
 strongest of arguments for the double standard, and the theory 
 that, as wheat and cotton have followed silver in the down- 
 ward course, silver was really the more constant measure of 
 their value has been extensively held. But wheat has risen 
 to a dollar and silver has dropped to 26(7. In reality this is a 
 blessing to the cause of bimetallism. It will tend to protect 
 it from some of its alleged friends, to deprive our " silverism " 
 of much of its strength, to prevent demagogues playing so suc- 
 cessfully on the passions of the distressed farmer, and to make 
 the free-silver propaganda less rampant in Congress. 
 
 Still, it is clear that the remarkable increase in the pro- 
 duction of gold introduces a new element into the discussion. 
 The annual production of the yellow metal is now greater than 
 the value of gold and silver combined in the days of the Cali- 
 fornia and Australian yield, when economists talked of de- 
 monetizing it; and, for 1897, it is estimated that the value of 
 the product will exceed that of gold and silver combined for 
 any year in history up to 1888. The possibilities of the Yukon 
 are yet unknown. Gold is now being sifted out of the rich 
 gravel, and the scientific theory is that these nuggets are but 
 the wearing away from some mother lode, working in the 
 
 30
 
 466 THE PRESENT AND THE FUTURE 
 
 course of ages into the valleys of the tributaries of the upper 
 Yukon. An old California miner who has been three years 
 in the region of the Yukon and spent 1896 on the Klondike 
 says: " My advice to men who know about quartz mining, and 
 have had experience as prospectors so that they know pay rock 
 when they see it, is to hunt for the mother lode that has fed the 
 placers of the Klondike region. The man who finds that and 
 locates a claim will surely have almost solid masses of pure 
 gold. King Solomon's mines of fiction won't compare with 
 that lode. Why, if that lode is found and can be worked it will 
 demonetize gold, as sure as gospel." 
 
 But there are noticeable uncertainties here. The lode may 
 not be found. Geology tells us that at some time a milder 
 climate prevailed north of the Arctic circle, and that the frozen 
 north is a later chapter in the biography of the earth. The 
 lode may be hidden under the eternal snows of the highlands 
 of that region, to remain inaccessible till ages hence the warm 
 breath of the tropics again eats its way towards the pole. The 
 world's new production has been coming from the lands be- 
 yond the frontiers of civilization, and is now pushed to regions 
 under the midnight sun. 
 
 But even if the production of gold rises to the value of 
 $300,000,000 a year by the end of the century, as some are 
 predicting, there is little probability that the question of de- 
 monetization would suggest itself. The present situation is 
 very different from that of the fifties, when Chevalier sounded 
 his warning; then but two governments on the face of the 
 earth maintained an exclusive gold standard. 
 
 I^ow, for every increase of gold produced hands are 
 stretched. Governments are waiting, and so far the increase 
 has not affected general prices, but the continued relaxation 
 in the demand for silver drives its price lower and lower in 
 the market. He is not a dreamer who asks what would hap- 
 pen if, after all the nations have succeeded in climbing to a
 
 POSSIBILITIES OP A HEALTHY EXPANSION 467 
 
 gold standard, the production of the metal should suddenly 
 decline. It is a practical question, for gold once secured does 
 not endure forever. The total stock of gold in the world is es- 
 timated at no more than the total production of this century. 
 What has become of the treasure of fifty centuries before? 
 "What has become of that mighty treasure poured into Europe 
 after the discovery of America, the elixir of the renaissance of 
 the sixteenth century? 
 
 Providence works slowly and mysteriously, and, after all, 
 monetary laws and conferences are but manifestations of the 
 erring and finite. It may lift us all to the plane of the gold 
 standard, only to close the doors to new supplies of the metal. 
 Yet it will not fail humanity if there is a destiny marked out 
 for it. Wonderfully have we extended the limits of our finite 
 vision; still it is a narrow window. Stranger things have hap- 
 pened than the realization of the dreams of the old alchemists. 
 Even now one of our scientists and a man of some reputation 
 claims that he is making gold from silver, and that the assay 
 offices are taking his product. The long debate over bimetal- 
 lism may be only the talk in the anteroom, and science may 
 throw open the door when, at last, after storming in vain, we 
 sit ourselves down determined to make the best of our oppor- 
 tunities. 
 
 History reveals no reason why economists should stand ap- 
 palled at the possibility of a doubling of the standard of value, 
 whether brought about by science in resolving the two metals 
 into one, or by England eventually accepting bimetallism for 
 the sake of her commerce and India, or by the product of gold 
 fields under the midnight sun. It is easy for the world to have 
 too much paper money, but difficult for it to obtain too much 
 of that made of a precious metal, a metal whose every ounce 
 is true wealth. 
 
 The world's supply of gold and silver was doubled in the 
 sixteenth century, and history records a renaissance. The
 
 468 THE PRESENT AND THE FUTURE 
 
 product of gold was doubled in the middle of the present cen- 
 tury, and history reveals something like another renaissance. 
 
 The economic changes in the fifty years since have brought 
 us a social question. The capacity of the masses to produce 
 and to consume has not gone hand in hand with their remarka- 
 bly expanding capacity to produce. The capacity to consume 
 has not declined; it simply has not kept pace in the develop- 
 ment. 
 
 Opinions will certainly differ as to the cause. Another 
 generation must tell the world who of us is right and who is 
 wrong. The desirability of a healthy expansion of business on 
 a money basis of true intrinsic value will not be denied, and if 
 again doubling the standard of value would do this, would 
 widen the opportunities of the millions having the capacity 
 but not the means, infuse new and encouraging elements into 
 the social body, throw down certain economic barriers which 
 seem to restrain the innocent and the ambitious, and awaken 
 new life in languishing industries, a new spirit in humanity, 
 a new energy in a degenerating literature and art, history 
 might one day call it another renaissance.
 
 INDEX 
 
 ACT, of Austria-Hungary, of 1892, estab- 
 lishing gold standard, 373. 
 
 of France, of 18T6, suspending sil- 
 ver coinage, 144. 
 
 of Germany, of 1871, instituting gold 
 coinage, 116 ; of 1873, establishing 
 gold standard, 126. 
 
 of Holland, of 1873, suspending sil- 
 ver coinage, 124; of 1875, instituting 
 gold coinage, 139. 
 
 of India, of 1864, making the sover- 
 eign legal tender, 31 ; of 1893, clos- 
 ing mints to silver, 417. 
 
 of United States, of 1792, creating 
 national coinage, 10 ; of 1851, debas- 
 ing silver pieces, 15; of 1853, making 
 silver coins subsidiary, 16 ; of 1869, 
 for strengthening public credit, 96 ; 
 of 1873, revising the mint laws, 93, 
 109-115, 117-123, 152-159, 208, 
 210 ; of 1878, for coinage of silver 
 dollars, 178-192, 197-199, 250, 264, 
 269, 325, 335, 340, 342, 345 ; of 1890, 
 for silver purchases, 364-368, 371, 
 373, 387, 391, 424, 425, 427. 
 
 Allard, A., Belgian delegate in confer- 
 ence of 1892, 376, 377, 396, 400, 404. 
 
 Allison, Senator W. B., amends the 
 Bland Bill, 180 ; on importance of a 
 conference, 187-189; delegate in con- 
 ference of 1892, 377, 380, 397, 402, 
 406. 
 
 Alvensleben, Count, German delegate 
 in conference of 1892, 377, 382. 
 
 Andrews, E. B., on effect of tariffs, 347 
 n. ; United States' delegate in confer- 
 ences of 1892, 376; on American in- 
 itiative, 462. 
 
 Atkinson, Edward, special commission- 
 er to Europe, 346; report of, 348-350. 
 
 Austria, monetary treaty with German 
 states, 9; in conference of 1867, 45, 
 58, 64, 70, 75, 80 ; provisional treaty 
 with France, 88; in conference of 
 1878, 205, 230, 246 ; closes mints to 
 
 silver, 253; in conference of 1881, 
 270, 278, 290, 304, 309, 322; adopts 
 protective policy, 333; imports of 
 
 old, 354, 425 ; adopts gold standard, 
 73, 445, 451. 
 
 Avila, Count d', Portuguese delegate in 
 conference of 1867, 49, 57, 73, 75. 
 
 BAGEHOT, Walter, on universal money, 
 87 ; on German currency, 90. 
 
 Balfour, Arthur, member of English 
 Gold and Silver Commission, 344 ; 
 subscribes to bimetallism, 363; Man- 
 sion House address of, 419; on Indian 
 currency, 437. 
 
 Bank of Austria-Hungary, gold stock 
 of, 445. 
 
 of England, efforts to retain gold, 
 146, 192, 195, 359, 361, 369; reserve 
 in 1876 and 1877, 194; reserve in Octo- 
 ber, 1887, 251 ; discount rate and ap- 
 peals for help, 291 ; willing to hold 
 silver in reserve, 317; helped by Bank 
 of France. 360 ; reserve in 1889, 361 ; 
 condition in 1891 and 1892, 375; pres- 
 ent condition, 445. 
 
 of France, opposes adoption of gold 
 standard, 89; condition in 1874, 143; 
 condition in 1876 and 1877, 194; silver 
 in reserve, 212, 334; proportion of 
 gold to silver in reserve, 258, 259, 267; 
 increase of gold stock, 359, 435; con- 
 dition in 1891 and 1892, 375; present 
 condition, 445. 
 
 of Germany, condition in 1876 and 
 1877, 194; discount rate, 195, 253, 261; 
 silver stock, 366 ; increases its gold, 
 389; condition in 1891 and 1892, 375. 
 
 of Belgium, favors gold standard, 137, 
 310; condition in 1876 and 1877, 194. 
 
 of the Netherlands, ceases to buy 
 silver, 124; condition in 1876 and 1877, 
 194; favors bimetallism, 310; loss of 
 gold in 1882, 326. 
 
 Barbour, Sir David, member English
 
 470 
 
 INDEX 
 
 Gold and Silver Commission, 344; 
 plan for gold standard In India, 371, 
 386, 388 ; on silver in India, 421. 
 
 Baring crisis, 359, 367, 368. 
 
 Earth, Dr. T., on Mirbach resolution in 
 Reichstag, 433. 
 
 Beckwith, 'N. M., United States Com- 
 missioner to Exposition of 1867, 37 ; 
 letter to Seward, 38. 
 
 Belgium, opposes double standard for 
 Latin Union, 30, 138 ; in conference 
 of 1867, 49, 61, 62, 64 ; difficult posi- 
 tion in 1874, 137 ; in conference of 
 1878, 205, 215, 227, 245; redemption of 
 its silver coins, 252, 335; in conference 
 of 1881, 270, 284, 299 ; in conference 
 of 1892, 376, 378, 396, 400, 404. See 
 Bank. 
 
 Belmont, August, member of refunding 
 bond syndicate, 170 ; his request of 
 Sherman, 172; letter to Sherman on 
 Bland Bill, 178 ; favors international 
 conference, 183. 
 
 Benton, T. H., on ratio of 16 to 1, 15. 
 
 Berthemy, French Minister to United 
 States, transmits Latin Union treaty 
 to Seward, 38; transmits invitation to 
 conference, 45; note to Seward, 92. 
 
 Bills of exchange invented, 4. 
 
 Bimetallism, international, basis for be- 
 lief in, 136; early agitation in Europe 
 for, 140-142, 144, 146 ; conference on, 
 suggested in Congress, 160 ; effect of 
 .Bland- Allison Act on, 191, 198, 349 ; 
 discussed in conference, 212-231, 
 
 ' 235-249, 279-286, 289, 291-305, 
 400-403; growth of German senti- 
 ment for, 264, 266, 340, 431; with only 
 two states, 306; monometallists ad- 
 mit possibility of, 304, 315, 324, 351 ; 
 effect of Cleveland tariff message on, 
 350; growth of sentiment for, in Eng- 
 land, 341, 351, 362, 413, 434, 437; de- 
 sired by India, 372, 390, 417; effect of 
 "silver craze" of 1895 on, 439; effect 
 of election of 1896 on, 442; effect of 
 increased gold production on, 463. 
 
 . See Double Standard. 
 
 Birch, J. W., member of English Gold 
 and Silver Commission, 344, 351. 
 
 Bishops, coinage by, 2, 6, 8. 
 
 Bismarck, declines for Prussia to join 
 Latin Union, 40, 89; influence on Ger- 
 man money reform, 116 ; reported a 
 bimetallist, 265; on policy of protec- 
 tion, 328 n. 
 
 Bland, Congressman R. P., his first free- 
 coinage bill, 160; member of Silver 
 Commission, 162; advocates ratio of 
 16 to 1, 167; free-coinage bill of 1877, 
 178; accepts Allison compromise, 
 187. 
 
 Bogy, Senator L. V., remark on act of 
 1873, 157; for unlimited silver coin- 
 
 age, 159; member of Silver Commis- 
 sion, 162; favors ratio of loi to 1, 
 166. 
 
 Bonds, United States, movement to pay 
 in greenbacks, 96; contract for re- 
 funding, 170; Sherman's letter on 
 payment in gold, 176; sale of, stopped 
 by Bland Bill, 180; returned from 
 Europe, 182 ; Matthews's resolution 
 on, 184; subscriptions opened for, 
 185 ; another contract for, 190 ; Eng- 
 land pays for cereals with, 196 ; high 
 fiat ding of, abroad, 224 ; first sale of, 
 under Cleveland, 428 ; result of the 
 sales, 440. 
 
 Boissevain, Dutch delegate in confer- 
 ence of 1892, 378, 395, 400. 
 
 Boutwell, G. S., Secretary of Treasury, 
 supervises revision of mint laws, 109; 
 member of Silver. Commission, 162; 
 minority report of, 164. 
 
 Bowen, Prof. Francis, member of Sil- 
 ver Commission, 162 ; dissenting re- 
 port of, 165. 
 
 Broch, O. J., Norwegian delegate in 
 conference of 1867, 49, 65 ; statistics 
 by, cited, 132 ; in conference of 1878, 
 206, 228; in conference of 1881, 270, 
 280. 
 
 Burckhardt-Bischoff, Swiss delegate to 
 conference of 1881, 270, 288. 
 
 Bullionist, The, cited, 252. 
 
 CANADA, and monetary system of 
 United States, 61, 314; in conference 
 of 1892, 271, 314. 
 
 Casasus, Mexican delegate in confer- 
 ence of 1892, 378, 389, 397. 
 
 Cernuschi, Enrico, early advocate of 
 bimetallism, 97, 140, 144 ; testimony 
 before Silver Commission, 166: 
 French delegate in conference of 
 1881, 271, 273, 278, 285, 299, 313 ; on 
 free coinage by United States alone, 
 437. 
 
 Chaplin, Henry, member English Gold 
 and Silver Commission, 344. 
 
 Chase, Salmon P., on uniform coinage, 
 19. 
 
 Chevalier, Michel, introduces Ruggles 
 to Parieu, 41; defends gold standard, 
 144. 
 
 Chili adopts gold standard, 445. 
 
 Churchill, Lord Randolph, urges coin- 
 age agreement for India, 341 ; Chan- 
 cellor of the Exchequer, 344. 
 
 Circulation, in United States, 11, 15, 
 112, 152, 198, 329, 336, 355, 364, 425 ; 
 in Germany, 127, 256; in France, 212, 
 336, 340; in India, 386, 414 ; in Mexico, 
 449. 
 
 Cleveland, President, letters to silver 
 congressmen, 336; urges suspension 
 of silver coinage, 340; effect of tariff
 
 INDEX 
 
 471 
 
 message of, 350 ; asks for postpone- 
 ment of adjourned conference, 412; 
 calls Congress in special session, 425: 
 policy of, 426-430, 439-442. 
 Coinage, ancient, 1-6 ; agreements for, 
 7, 29, 138; in the world, 236, 243, 385; 
 in United States, 11-17, 60, 66, 122, 
 130, 156, 180, 187, 264, 267, 309, 356; 
 in France, 32, 60, 106, 198, 309, 340 ; 
 in England, 60, 268, 309, 369 ; in Ger- 
 many, 106, 116, 126, 130, 134,256,275, 
 309; in India, 133; in Holland, 139, 
 326; in Belgium, 252, 335; in Russia, 
 145, 446; in'Austria-Hungary, 373; in 
 Japan, 446; of billon, 236. 
 
 uniform international, urged by J. 
 Q. Adams, 12 ; Secretary Chase on, 
 19; declarations for, in statistical 
 congresses, 20-23 : discussed in Post- 
 al Congress, 23 ; Napoleon's plan for, 
 25 ; advocated in United States Con- 
 gress, 37 ; Sherman's letter on, 42 ; 
 conference in behalf of, 45 ; interna- 
 tional committee's plan for, 46 ; con- 
 sidered in conference, 51 et seq.; Rug- 
 gles's report on, 92 ; Sherman Bill for, 
 93 ; Kelley's bill for, 100 ; effect of 
 Napoleon's fall on, 104 ; suggests re- 
 vision of mint laws, 109 ; United 
 States correspondence on, 113 ; Prof. 
 Boweu's plan for, 166; neglected in 
 German currency reform, 116; stand- 
 ing of, in conference of 1878, 203, 221, 
 236 ; suggested in conference of 1892, 
 403. 
 
 Coin's Financial School, 439. 
 
 Commerce, ancient, 1 ; after the Cru- 
 sades, 3 ; after gold discoveries, 31 ; 
 of Germany and United States, 328 ; 
 increase in India, 331 ; increase in 
 Mexico, 398, 449 ; of India and Eng- 
 land, 451. 
 
 Commission, French Imperial, 26, 37 ; 
 French Monetary, 88, 105 ; English 
 Uniform Coinage, 91, 101 ; Swedish 
 Monetary, 103, 114 ; Dutch Monetary, 
 124, 139; Belgian Monetary, 137; 
 English on Depreciation of Silver, 
 148 ; Silver of United States, 161-167 ; 
 English on Depression of Trade, 258, 
 341, 342; English Gold and Silver, 
 343, 351 ; Indian Currency, 372, 412- 
 417 ; German Silver, 431 ; English on 
 Depression of Agriculture, 460; Wol- 
 cott Bimetallic, 459. 
 
 Conference, Latin Union of 1865, 28-30 ; 
 of 1874, 138 ; of 1878, 252 ; of 1885, 
 334 338 
 
 of 1867, planned by Napoleon, 35, 39 ; 
 invitations to, 45 ; delegates to, 47- 
 50 ; heads of inquiry, 54 ; adopts sys- 
 tem of Latin Union, 63 ; adopts gold 
 standard, 68 ; chooses 5-franc piece 
 as unit, 76; provides for 25-franc 
 
 piece, 78 ; means of control, 80 ; pro- 
 ceedings reviewed, 83 ; F. A. Walker 
 on, 236. 
 
 of 1878, suggested, 141, 160, 183 ; bill 
 for, 186 ; invitations to, 203 ; absence 
 of Germany, 203, 214; delegates to, 
 204 ; United States' propositions, 209 ; 
 France in, 212 ; Switzerland in, 218 ; 
 Italy in, 219 ; Greece in, 222 ; Holland 
 in, 222 ; England in, 225 ; Norway in, 
 228 ; United States in, 235-244 ; Euro- 
 pean response, 244 ; Italy dissents, 
 246 ; reply of United States' delegates, 
 247 ; cause of failure, 249, 250. 
 
 of 1881, France seeks co-operation 
 for, 260; invitations to, 269; opens, 
 271 ; heads of inquiry, 272 ; German 
 declaration, 274 ; Cernuschi's propo- 
 sition, 280; solicitude of England and 
 Germany, 281 ; Russia's position, 286; 
 Germany's alleged loss, 288 ; United 
 States' position, 292, 300, 311 ; Eng- 
 land and India, 295, 302-305 ; ques- 
 tion of adjournment, 302; an inter- 
 mission, 306; Levy plan, 308; Cernu- 
 schi and Schraut, 313; Holland's 
 position, 316, 318; English induce- 
 ments, 317; French and American 
 reply, 320; gold monometallism de- 
 fended, 280, 284, 297, 299; bimetal- 
 lism defended, 283, 285, 289, 291-297, 
 300 ; character of, 323. 
 
 of 1892, preliminary efforts for, 33$- 
 342, 346-350, 370 ; delegates to, 376 ; 
 United States' propositions, 378-381 ; 
 the Rothschild plan, 384-388; exam- 
 ining committee, 388; the Soetbeer 
 plan, 393; the Levy plan, 394; the 
 debate, 395-403 ; other plans, 403-405; 
 adjournment, 406. 
 
 Conkling, Senator, significant inquiry 
 of, 156. 
 
 Costa Rica adopts gold standard, 445. 
 
 Council bills, India, sold from 1855 to 
 1880, 132 ; increase of, 133, 149 ; pro- 
 posal for checking sale of, 254 ; as 
 related to Rothschild plan, 387 ; after 
 closing of mints, 414 ; present rate, 
 455. 
 
 Courcelle-Seneuil, French bimetallic 
 advocate, 140, 144. 
 
 Courtney, Leonard, member of English 
 Gold and Silver Commission, 344 ; a 
 monometallist, 351 ; member of Indi- 
 an Currency Commission, 373 ; be- 
 comes a bimetallist, 416. 
 
 Crusades, effect on commerce, 3. 
 
 Currie, Bertram, member of English 
 Gold and Silver Commission, 373; 
 delegate in conference of 1892, 376, 
 396, 406. 
 
 DEBT, United States, proposed payment 
 of, in greenbacks, 95-97 ; increase of,
 
 472 
 
 INDEX 
 
 by demonetization of silver, 138, 147, 
 228, 448 ; United States' foreign, 357, 
 441 ; India's foreign, 414, 452-456. 
 
 Decimal system, devised in France, 9 ; 
 adopted in United States, 10; report 
 of J. Q. Adams on, 12; discussed in 
 England, 18 ; in Congress, 18, 35 ; in 
 statistical congresses, 21. 
 
 Denmark, in conference of 1867, 49, 80 ; 
 joins Scandinavian Union, 124; in 
 conference of 1881, 270, 308-310; in 
 conference of 1892, 377, 382, 394, 403. 
 
 De Normandie, French delegate in con- 
 ference of 1881, 271, 291; vice-presi- 
 dent Bimetallic League, 437. 
 
 Disraeli, B., on depression of trade, 255. 
 
 Double standard, rejected in Congress, 
 16, 120; opposed by Ruggles, 22, 65; 
 why retained in Latin Union, 30; 
 likened to opium, 64; rejected in 
 conference of 1867, 69; not recog- 
 nized in United States, 71; popular 
 in France, 81, 89 ; defended by Seyd, 
 87; France ready to abandon, 102; 
 an alternating standard in France, 
 111 ; not understood in United States, 
 118 ; not desired by silver men, 153- 
 155; restoration of, urged by Silver 
 Commission, 163 ; Senator Edmunds 
 on, 188; discussed in conference of 
 1878, 215 et sea.; Germany urged to 
 restore, 261. See Bimetallism. 
 
 Dumas, J. B., president French Com- 
 mission on Coins, sends sample 25- 
 franc piece to President Johnson, 94 ; 
 in conference of 1881, 271, 314. 
 
 Dunham, Congressman, remarks on 
 double standard in 1853, 16. 
 
 Economist, The, on the struggle for gold, 
 368. 
 
 Edmunds, Senator G. F., on double 
 standard, 188 ; on Democratic party, 
 345. 
 
 England, coinage of, 5 ., 60, 268, 309, 
 369; adopts gold standard, 9; deci- 
 mal system discussed in, 18; move- 
 ment in, for uniform coinage, 21, 91, 
 101, 102 ; in conference of 1867, 73, 
 78 ; concerned over fall of silver, 146, 
 148, 226, 254, 306, 373, 410, 456 ; in 
 conference of 1878, 203, 205 ; conser- 
 vatism of, 279, 339, 409 ; in conference 
 of 1881, 271, 303-305; trade depres- 
 sion in, 255, 258, 330, 341, 342, 460; 
 movement for bimetallism in, 341, 
 &51, 362, 434 ; its Gold and Silver Com- 
 mission, 344, 351 ; financial crisis in, 
 359, 367 ; imports and exports of gold, 
 354 ; exchange with France, 369 ; in 
 conference of 1892, 376, 382, 384, 384, 
 369, 398, 399, 406 ; foreign investments 
 of, 440 ; and India, 372, 412-417, 430, 
 451-456. See Bank. 
 
 Evarts, W. M., Secretary of State, re- 
 ported in favor of free silver coinage, 
 175 ; desires another conference, 258 ; 
 in the conference of 1881, 271, 300, 
 320. 
 
 Everett, R. L., resolution of, in Com- 
 mons for conference, 434. 
 
 Exchange, between England and Unit- 
 ed States, 12; Sherman on obstruc- 
 tion to, 97 ; between Germany and 
 France, 289, 358; rate of, 358, 360; 
 between England and France, 369 ; 
 between England and India, 412, 415, 
 419, 430, 455. 
 
 Expectancy, attitude of, 212, 222, 230, 
 249, 324. 
 
 FAKR, Dr., Register-General of Great 
 Britain, plan for uniform coinage, 22. 
 
 Farrar, T. H., member of English Gold 
 and Silver Commission, 344, 351 ; 
 member Indian Currency Commis- 
 sion, 373. 
 
 Feer-Herzog, Charles, Swiss delegate in 
 conference of 1865, 28 ; in conference 
 of 1867, 48, 62, 64, 75 ; urges France 
 to adopt gold standard, 105 ; in con- 
 ference of 1878, 205, 210, 217, 232, 234, 
 238. 
 
 Fenton, R. E., United States delegate 
 in conference of 1878, 204, 211, 243. 
 
 Folger, C. J., Secretary of Treasury, 
 urges repeal of Bland-Allison Act, 325. 
 
 Forssell, Hans, Swedish delegate in 
 conference of 1881,270, 297; in con- 
 ference of 1892, 376, 378, 383, 401, 405. 
 
 Fortamps, Belgian delegate in confer- 
 ence of 1865, 29 ; in conference of 
 1867, 49, 62, 65. 
 
 Foville, French delegate in conference 
 of 1892, 377, 405. 
 
 France, coinage, of, 6, 32, 60, 106, 198, 
 309, 340 ; and the metric system, 9, 12 ; 
 Imperial Commission of, 26, 37; loss 
 of silver, 27; in conference of 1865, 
 30 ; silver coinage in, 33, 198, 212, 336, 
 340 ; seeks additions to Latin Union, 
 35 ; in conference of 1867, 51, 55, 58, 
 77, 80 ; preliminary treaty with Aus- 
 tria, 88 ; monetary commission of, 
 88, 102, 105 ; double standard in, 81, 
 89, 102, 111 ; gold standard advocated 
 in, 88, 97, 145, 263; stock of coin in 
 1870, 106 ; payment of war indemnity, 
 107 ; position after war with Prussia, 
 138 ; resumes specie payments, 143 ; 
 suspends silver coinage, 144 ; in the 
 conference of 1878, 212-214, 221; 
 flooded with silver, 258, 267 ; desires 
 another conference, 260 ; in confer- 
 ence of 1881, 273, 278, 280, 313, 314, 
 320 ; exchange with Germany, 289, 
 358; exchange with England, 369; 
 adopts higher duties, 323 ; in Latin
 
 INDEX 
 
 473 
 
 Union conference of 1885, 834; in 
 conference of 1892, 382, 395, 403 ; in- 
 sists on her ratio, 339, 404 ; imports 
 and exports of gold. 354 ; bimetallic 
 sentiment in, 3<0, 435 ; co-operates 
 with Wolcott Commission, 401. See 
 Bank. 
 
 Franco- Prussian war, economic effects 
 of, 104-108, 358 n. 
 
 Free-Silver bills, 160, 167, ITS, 256, 342, 
 441. 
 
 Freemantle, Sir Charles, British dele- 
 gate in conference of 1881, 271, 277, 
 297, 314, 317 ; member of Gold and 
 Silver Commission, 344, 351 ; in con- 
 ference of 1893, 376, 398. 
 
 Germany, coinage of, 4, 6, 106, 116, 126, 
 130, 134, 256, 275, 309 ; coinage agree- 
 ments, 7-9 ; opinion for gold stand- 
 ard. 90, 105; stock of coin in 1870, 
 106 ; empire formed, 115 ; gold coin- 
 age ordained, 116; act of 1873, 126; 
 sales of silver, 134, 149, 192, 195, 197, 
 288, 313; decline invitation to con- 
 ference of 1878, 203, 214 ; circulation 
 in 127, 256; responsibility for silver's 
 fall, 231 ; financial condition in 1878, 
 253; discontinues sales of silver, 256; 
 urged to adopt double standard, 261; 
 Bismarck modifies monetary plans, 
 265; in conference of 1881, 274, 306, 
 813,315; exchange with France, 289, 
 358 ; imposes protective tariff, 328 ; 
 proposes tariff zollverein, 333, 363 ; 
 awaits England's action, 340, 349 ; in 
 conference of 1892, 377, 382 ; imports 
 and exports of gold and silver, 134, 
 195,197, 354 ; bimetallic resolution in 
 Reichstag, 431-434. See Bank. 
 
 Ghosh, A. S., Professor of Economics 
 in Calcutta University, on taxes in 
 India, 454; on rate of council bills, 
 455. 
 
 Gibbs, H. H., British delegate in con- 
 ference of 1878, 206, 232, 233; be- 
 comes a bimetallist, 260, 419 ; on 
 American initiative, 459. 
 
 Giffen, [Robert, on fall in prices, 262, 
 263 n. 
 
 Gladstone, W. E., announces close of 
 Indian mints, 418. 
 
 Godley, Arthur, member Indian Cur- 
 rency Commission, 373. 
 
 Gold, production of, 31, 123, 330, 464 ; 
 use of, in arts, 131 ; appreciation of, 
 147, 150, 262, 362. 415; movement of, 
 267, 327, 337, 354, 361, 422 ; scarcity of, 
 3, 126, 241, 261, 266, 286, 330, 361/368. 
 
 coinage, in aiicient times, 2; in 
 England, 5 n., 60, 268, 309, 369; in 
 United States 60, 66, 130, 267, 423; 
 in France, 60, 106, 336 ; in Germany, 
 106, 116, 126, 130 ; in Austria, 373 ; 
 
 in Holland, 139; in Russia, 446; in 
 Japan, 446 ; in the world, 130. 
 
 reserve in United States, 354, 375, 
 425, 428. 
 
 standard, adopted by England, 9; 
 desired in United States, 16, 112, 153 ; 
 urged for Latin Union, 30, 105; 
 sought in India, 81, 371, 386 ; accept- 
 ed in United States, 35, 93, 112, 120, 
 152-156 ; single objection to, in con- 
 ference of 1867, 64 ; adopted in 
 conference, 68 ; natural movement 
 for, 85, 97 ; German opinion for, 90 ; 
 Ruggles's view of, 93 ; " an American 
 idea," 98; adopted by French com- 
 mission, 102,.106 ; adopted by Swedish 
 commission, 114; advocated by Dutch 
 commission, 124, 139 ; advocates of, 
 in France, 144; opposed in Belgium, 
 137, 140 ; discussed in conference of 
 1878, 215, 225, 228; doctrine of, 
 weakened, 248 ; discussed in con- 
 ference of 1881, 280, 283, 297 ; adopted 
 by Germany, 126 ; adopted by Aus- 
 tria, 373; adopted by Japan, Russia, 
 Chili, Costa Rica, San Salvador, 445. 
 
 Goschen, G. J., British delegate in 
 conference of 1878, 204, 210, 225, 227, 
 232, 245; on scarcity of gold, 330, 
 363 ; on effect of Bland-Allison Act, 
 339 ; on Baring crisis, 368. 
 
 Graham, Thomas, British delegate in 
 conference of 1867, 47, 59, 60, 78. 
 
 Greece, early coinage, 2 ; joins Latin 
 Union, 40 ; in conference of 1867, 48, 
 80; in conference of 1878, 206, 222; 
 in conference of 1881, 270 ; in con- 
 ference of 1892, 377, 3S2. 
 
 Greenback party, 151, 168, 177. 
 
 Greenbacks, in payment of national 
 debt, 95 ; and the gold reserve, 426, 
 429, 439. 
 
 Groesbeck, "W. S., member of Silver 
 Commission, 162; adheres to old 
 ratio, 166; delegate in conference of 
 1878, 204, 208, 210, 239. 
 
 HANDELSTAG, German, petition for 
 gold standard, 89. 
 
 Hanseatic League, 4. 
 
 Harcourt, Sir William, on Everett reso- 
 lution, 434. 
 
 Hardie, Robert, on protection and gold 
 standard, 441 n. 
 
 Haupt, Ottomar, Austrian economist, 
 on silver in 1890, 367. 
 
 Hayes, President, reported in favor of 
 silver coinage, 175 : message to Con- 
 gress, 180 ; vetoes Bland-Allison Bill, 
 189 ; on resumption, 263. 
 
 Hengelmiiller, C. von, Austrian dele- 
 gate in conference of 1878, 205, 230. 
 
 Herschell, Lord, chairman English 
 Gold and Silver Commission, 344,
 
 474 
 
 INDEX 
 
 351 ; chairman Indian Currency Com- 
 mission, 372. 
 
 Hock, Baron de, Austrian advocate of 
 uniform coinage, 45 ; in conference 
 of 1867, 49, 58, 64, 70, 75, 80. 
 
 Hohenlohe, Chancellor von, on Mirbach 
 resolution, 433. 
 
 Hooper, Congressman, on double stand- 
 ard, 118 ; letter from Seyd, 119 ; on 
 the silver dollar, 120. 
 
 Holland, coinage of, 139, 326 ; in confer- 
 ence of 1867, 58,64, 68, 80 ; suspends 
 silver coinage, 124, 139 ; movement 
 in, for bimetallism, 141; in conference 
 of 1878, 206, 222 ; in conference of 
 1881, 270, 283, 291, 295, 316, 318 ; in 
 conference of 1892, 378, 395, 399, 400. 
 See Bank of. 
 
 Horton, S. Dana, United States' dele- 
 gate in conference of 1878, 204, 212, 
 233, 242 ; in conference of 1881, 271, 
 273, 289, 300. 
 
 Houldsworth, Sir William, member 
 English Gold and Silver Commission, 
 344 ; on bimetallic petition to Com- 
 mons, 362 ; in conference of 1892, 
 376, 399, 400 404, 407. 
 
 Howe, T. O., United States' delegate in 
 conference of 1881, 271, 292. 
 
 INDEMNITY, French war, payment of, 
 107. 
 
 India, seeks gold standard, 81, 371, 386; 
 coinage, 133 ; silver imports, 33, 132, 
 232, 421; gold imports, 132, 361; 
 council bills, 132, 149, 254, 387, 414, 
 455; difficulties of trade with, 147 ; de- 
 clines to close mints, 150 ; seeks loans 
 in England, 193, 420; aid of, in main- 
 taining silver, 226 ; in conference of 
 1881, 271, 295,302; increased com- 
 merce of, 331 ; appeals for free-silver 
 agreement, 341, 344; prefers bimet- 
 allism, 372, 390, 417; in conference 
 of 1892, 377, 386-388, 390, 396, 399 ; 
 rupee vacuum in, 412 ; per capita cir- 
 culation in, 414 ; mints closed to 
 silver, 417-419, 420 ; duty on silver, 
 430 ; plight of, 451 ; foreign debt, 
 414, 452-456; taxation in, 453; refusal 
 to reopen mints, 462. 
 
 International committee on uniform 
 coinage, 37 ; report of, 46. 
 
 Iowa, campaign of 1877 in, 169, 178. 
 
 Italy, in conference of 1865, 30 ; in con- 
 ference of 1867, 49 ; exports of silver, 
 145 ; in conference of 1878, 206, 219, 
 246 ; in conference of 1881, 270, 285, 
 316; efforts for resumption, 330, 344 ; 
 in conference of 1892, 378, 406. 
 
 JACOBI, Moritz, Russian delegate in 
 
 conference of 1867, 48, 67. 
 Japan adopts gold standard, 445-447. 
 
 Jefferson, Thomas, on decimal system, 
 10 ; stops coinage of silver dollars, 11 . 
 
 Johnson, President, receives sample 25- 
 frauc piece from France, 94; his strug- 
 gle with Congress, 92, 101. 
 
 Jones, Senator, advocates gold stand- 
 ard, 153 ; on failure to coin silver 
 dollars, 157; suggests bimetallic 
 conference, 160 ; member of Silver 
 Commission, 162 ; advocates ratio of 
 15 to 1, 166 ; votes against conference 
 amendment, 187 ; in conference of 
 1892, 377, 400. 
 
 KASSON, J. A., advocates uniform coin- 
 age, 35, 203. 
 
 Kelley, W. D., opposes currency con- 
 traction, 96; bill for uniform coinage, 
 100 ; management of mint bill, 115, 
 118; opposes double standard, 120; 
 explanation of, 157 ; becomes a free- 
 silver man, 160. 
 
 Kern, Dr. J. C., Swiss delegate in con- 
 ference of 1865, 29; in conference of 
 1867, 48, 70, 79; in conference of 1881, 
 270, 272. 
 
 Kimberly, Lord, on closing of India 
 mints, 420. 
 
 Knox, Comptroller of Currency, report 
 on mint bill, 109, 110. 
 
 Kuefstein, Count von, Austrian dele- 
 gate in conference of 1878, 205, 231, 
 245, 246; in conference of 1881, 270, 
 278, 290. 
 
 LARDY, C. E., Swiss delegate in con- 
 ference of 1878, 206; in conference 
 of 1881, 270, 315 ; in conference of 
 
 . 1892, 378, 394. 
 
 Latin Union, formed, 26 ; motives for, 
 26-30; initial treaty of, 29; rati- 
 fied, 32 ; gold standard urged for, 
 30, 105 ; effect on uniform coinage 
 movement, 34 ; United States asked 
 to join, 38 ; Prussia declines to join, 
 40 ; strength in conference of 1867, 
 50; system of, adopted in conference, 
 63; joined by Spain, 88; conference 
 of 1874, 138;" Spain withdraws from, 
 145; influence on price of silver, 233; 
 conference of 1878, 252; conference 
 of 1885, 334, 338 ; position in confer- 
 ence of 1892, 394. 
 
 Laveleye, Prof., Belgian economist, 
 opposes gold standard, 137, 140. 
 
 Leroy-Bealieu, cited, 107 n. ; advocate 
 of gold standard, 144. 
 
 Levi, Montefiore, president conference 
 of 1892, 377, 378, 4v5. 
 
 Levy, Moritz, Danish delegate confer- 
 ance of 1881, 270 ; his plan, 308, 394; 
 cited, 347 n. 
 
 Lieber, Dr., supports Mirbach resolu- 
 tion in Reischstag, 432.
 
 INDEX 
 
 475 
 
 Lindermann, Dr., Director of the Mint, 
 report for restoration of silver cur- 
 rency, 112. 
 
 Lubbock, Sir John, member English 
 Gold and Silver Commission, 344, 351. 
 
 Luzzatti, Italian delegate in conference 
 
 . of 1881, 270, 285. 
 
 McCREAKY, J. B., United States' dele- 
 gate in conference of 1892, 877, 399. 
 
 McCulloch, Hugh, Secretary of Treas- 
 ury, 39 ; approves Paris plan, 92 ; 
 analyzes Ruggles's report, 93 ; urges 
 suspension of silver coinage, 329. 
 
 McKinley, William, vote of, in 1877, 169 
 n. ; candidacy of, in 1896, 443 ; message 
 to Congress, 462. 
 
 Magnin, J., president conference of 
 1881, 272, 437. 
 
 Mallet, Sir Louis, Indian delegate in 
 conference of 1881, 271, 295 ; member 
 of Gold and Silver Commission, 
 344. 
 
 Manning, Daniel, Secretary of Treasury, 
 urges suspension of silver coinage, 
 341, 345, 350. 
 
 Marble, Manton, mission of, to Europe, 
 338. 
 
 Matthews, Stanley, resolution of, on 
 payment of public debt, 184. 
 
 Mees, W. C., Dutch delegate in confer- 
 ence of 1867, 49, 58, 64, 68 ; advocates 
 international bimetallism, 103, 140 ; 
 advice of, to United States, 222 ; let- 
 ter to conference of 1881, 310. 
 
 Meinecke, Prussian delegate in confer- 
 ence of 1867, 58, 65, 79. 
 
 Metric system, devised in France, 9 ; 
 extension of, 12, 18, 20, 38. 
 
 Mexico, in conference of 1892, 376, 389, 
 395, 397 ; present position of, 449-451. 
 
 Mirbach, Count von, bimetallic resolu- 
 tion of, in Reichstag, 431-433. 
 
 Molesworth, Sir G. L., British delegate 
 in conference of 1892, 377, 390, 399. 
 
 Montagu, Sir Samuel, member of Eng- 
 lish Gold and Silver Commission, 344. 
 
 Morgan, Senator E. D., report against 
 discontinuing silver dollar, 99. 
 
 Morrill, Senator J. S., favors a confer- 
 ence, 182. 
 
 NAPOLEON, Jerome, president Imperial 
 Commission, 26 ; in conference of 
 1867, 73, 77, 79, 81. 
 
 Napoleon III., seeks to extend metric 
 system, 18 ; character of, 23 ; plans of, 
 for uniform coinage, 24 ; economic 
 campaign of, 34 ; confers with Rug- 
 gles, 44 ; appoints Jerome to preside, 
 72; fall of, 103. 
 
 Norway, in conference of 1867, 49, 64, 
 80 ; first sales of silver in, 103 ; in con- 
 ference of 1878, 206, 228 ; in confer- 
 
 ence of 1881, 270, 2-K) ; in conference 
 of 1892, 378. 
 
 OHIO, campaign of 1877 in, 169, 177. 
 
 PARIEIT, E. de, in conference of 1865, 
 28 ; confers with Ruggles, 41 ; in con- 
 ference of 1867, 50-56, 62, 69, 79, 84 ; 
 advocates gold standard for France, 
 97, 138, 145, 263 ; on the Bland Bill, 
 199. 
 
 Pennsylvania, campaign of 1877 in, 169, 
 177. 
 
 Phelps, E. J., Minister to England, re- 
 port on British monetary policy, 339. 
 
 Pierson, Prof., Dutch delesrate in con- 
 ference of 1881, 270, 283, 291, 316, 318. 
 
 Pirmez, E., Belgian delegate in confer- 
 ence of 1878, 205, 215 ; in conference 
 of 1881, 270, 284, 299. 
 
 Portugal, in conference of 1867, 49, 57, 
 75, 80 ; in conference of 1881, 270, 299. 
 
 Prendergast, Moret, Spanish delegate 
 in conference of 1881, 270. 281, 290, 
 296,302. 
 
 Prices, of silver, 27, 32, 135, 233, 366, 
 387, 391, 414, 418, 420; fall of, 248, 
 262, 414, 415. 
 
 Prussia, declines to join Latin Union, 
 40, 89 ; in conference of 1867, 49, 58, 
 64, 79 ; solidifies German states, 103 ; 
 finances of, 253. 
 
 RAFFALOVICH, A., Russian delegate in 
 conference of 1892, 378, 388. 
 
 Ratio, of silver to gold, in ancient times, 
 1, 3; of 16 to 1 established, 14; as 
 effecting Latin Union, 27 ; compared 
 with production, 67 ; discussed in con- 
 ference of 1867, 69 ; from 1870 to 1880, 
 132 ; from 1861 to 1870, 135 ; adopted 
 in Holland, 139 ; Silver Commission's 
 report on, 166 ; under Bland-Allison 
 Act, 187, 198, 207, 241 ; France insists 
 on 15^ to 1, 339, 461. 
 
 Reay, Lord, Indian delegate in confer- 
 ence of 1881, 271, 277, 302. 
 
 Renzis, Baron de, Italian delegate in 
 conference of 1881, 378, 406. 
 
 Revenue, of the United States, 423, 
 429, 439 ; of India, 453 ; in Mexico, 450. 
 
 Rogers, Prof. J. T., on fall in prices, 
 262. 
 
 Romero, M., Mexican Minister to 
 United States, cited, 450. 
 
 Rothschild, N. M., & Sons, members of 
 refunding bond syndicate, 170, 179. 
 190. 
 
 Rothschild, A. de, British delegate in 
 conference of 1892, 377 ; plan of, 384- 
 393, 395, 398. 
 
 Roumania, joins Latin Union, 40 ; seeks 
 gold, 360 ; in conference of 1892, 376, 
 403.
 
 476 
 
 INDEX 
 
 Ruggles, S. B., United States' delegate 
 in statistical congress of 1863, 21 ; 
 objects to double standard, 22 ; sent 
 to Paris, 38 ; appointed to interna- 
 tional committee, 41 ; Seward's letter 
 concerning, 41 n. ; writes to Sherman, 
 42 ; interview of, with Napoleon, 44 ; 
 in conference of 1867, 46, 59, 71, 76 ; 
 report of, 92. 
 
 Rupee, stability of, 331 ; monopolized, 
 413-416, 430. 
 
 Rusconi, Count, Italian delegate in 
 conference of 1878, 206, 214, 219, 246 ; 
 in conference of 1881, 270, 287, 300. 
 
 Russia, in conference of 1867, 49, 58, 
 67, 80 ; suspends silver coinage, 145 ; 
 finances of, 193 ; in conference of 1878, 
 
 206, 231 ; in conference of 1881, 270, 
 286; in conference of 1892, 378, 388; 
 imports of gold, 354, 360, 445 ; gold 
 coinage of, 446. 
 
 SALISBUKY, Lord, deplores closing of 
 
 Indian mints, 421. 
 San Salvador adopts gold standard, 
 
 445. 
 Say, Leon, bimetallic advocate, 144 ; 
 
 president of conference of 1878, 205, 
 
 207, 211, 232. 
 
 Scandinavian Union, 114, 124. 
 
 Schraut, German delegate in confer- 
 ence of 1881, 270, 313, 315. 
 
 Seismit-Doda, Italian delegate in con- 
 ference of 1881, 270, 285, 300, 316. 
 
 Seward, Secretary VV. H., note to Ber- 
 themy, 39; letter concerning Ruggles, 
 41 n.; approves of Sherman's letter, 
 44 ; reply to Berthemy, 9'J. 
 
 Seyd, E., defends double standard, 97 ; 
 on the French commission, 105 ; let- 
 ter to Hooper, 119 ; accused by silver 
 men, 158, 365. 
 
 Sherman, John, reply to Ruggles, 42 ; 
 bill for uniform coinage, 93 ; on pay- 
 ing bonds in greenbacks, 96 ; reports 
 his bill, 97 ; and the mint bill, 113, 122; 
 and bond sales, 170 et seq. ; on silver 
 dollars, 157, 264, 268. 
 
 Silver, in Middle Ages, 3 ; price of, 27, 
 32, 135, 233, 366, 387, 391, 414, 418, 420 ; 
 demonetization of, 30, 46, 89, 98, 103, 
 116, 124, 138, 140, 145, 147, 152-159, 
 228, 237, 448 ; depreciation of, 148, 193, 
 228, 231, 3(59. 385, 398 ; first sales of, in 
 Norway, 103 ; India's service to, 226 ; 
 Indian imports of, 132, 232, 421, 430 ; 
 needed for change, 112, 156; pur- 
 chases of, 124 ; German imperial, 126, 
 257, 265; German sales of, 134, 149,192, 
 256, 288 ; German stock of, 366 ; pro- 
 duction of, 129, 135 ; use of, in arts, 
 131 ; in the world, 243, 385 ; Austria 
 closes mints to, 253 ; in reserves, 212, 
 317, 334 ; larger use of, 308, 370, et seq. 
 
 Indian Mints closed to, 417-419 ; tax 
 on, 389, 430; initiative of United 
 States for, 437, 459, 462. See Act 
 Coinage, Ratio, Free-silver bills, 
 Commission. 
 
 dollars, urged as unit by Jefferson, 
 10 ; coinage of, stopped by Jefferson, 
 11 ; scarcity of, before 1873, 36, 157 ; 
 discontinuance of, 94, 99, 111, 115, 
 122; coinage of, 161, 180, 327; sus- 
 pension of coinage urged, 264, 268, 
 324, 329, 340; circulation of, 264, 327, 
 354. 
 
 standard, early dissatisfaction with, 
 31 ; United States would not agree 
 to, 43, 312 ; Prussia's attitude to- 
 wards, 59; rejected in conference of , 
 1867, 67; displaced by gold, 85; 
 rejection in Holland, 124, 139; re- 
 jected in Germany, 126 ; in India, 150, 
 254, 295, 331, 341, 414, 452 ; considered 
 unfit, 165, 202; Austria advised to 
 adopt, 253 ; in Mexico, 398, 449 ; dis- 
 continued in Japan, 446. 
 
 Soetbeer, Dr. A., advocates gold stand- 
 ard, 87, 90 ; tables of, cited, 129 ; plan 
 of, for larger use of silver, 393. 
 
 Spain, takes treasure from America, 6 ; 
 in conference of 1867, 49, 80 ; and 
 Latin Union, 88, 145 ; in conference 
 of 1881, 270, 281, 290, 296, 302 ; in con- 
 ference of 1892, 377, 395. 
 
 Specie payments, resumed in France, 
 143 ; bill for, in United States, 153 ; as 
 effected by silver movement, 170 ct 
 seq. ; facilitated by maintaining silver, 
 227, 229, 250 ; opportunity for, in Aus- 
 tria, 253 ; followed by prosperity in 
 United States, 263; efforts for, in 
 Italy, 330, 344. 
 
 Stas, Belgian delegate in conference of 
 1867, 49, 61. 
 
 Stevens, Thaddeus, on payment of 
 national debt, 96. 
 
 Stewart, Senator W. M., on gold stand- 
 ard, 153, 154. 
 
 Strachey, Gen., member of Indian Cur- 
 rency Commission, 373; in confer- 
 ence of 1892, 376, 377, 396. 
 
 Sweden, in conference of 1867, 49, 64, 
 80; monetary commission, 103, 114; 
 Scandinavian Union, 124 ; in confer- 
 ence of 1881, 270, 297 ; in conference 
 of 1892, 378, 383, 401. 
 
 Switzerland opposes double standard 
 for Latin Union, 30, 138 ; in confer- 
 ence of 1867. 48, 58, 64, 79 ; in con- 
 ference of 1878, 205, 217, 238; in 
 conference of 1881, 270, 288; adopts 
 protective tariff, 333 ; tires of Latin 
 Union, 334; in conference of 1892, 378. 
 
 TAKIFF, protective, as affecting gold 
 supply, 259, 347, 423, 440; adopted
 
 INDEX 
 
 477 
 
 by Germany, 328 ; In Continental 
 states, 338 ; in campaign of 1896, 
 442. 
 
 Tax, on silver in Mexico, 389 ; in India, 
 430 ; on salt, imports and incomes iu 
 India, 453. 
 
 Terrell, E. II., vice-president of confer- 
 ence of 1892, 378. 
 
 Thielmann, Baron von, German dele- 
 
 fate in conference of 1881, 134, 2TO, 
 T4, 281, 298, 314. 
 
 Thoeuer, T. de, Russian delegate In 
 conference of 1878, 20(5, 231 ; in con- 
 ference of 1881, 270, 386. 
 
 Thurman, A. G., United States' delegate 
 in conference of 1881, 271, 311. 
 
 Tietgen, C. F., Danish delegate in con- 
 ference of 1892, 377, 403. 
 
 Tirard, French delegate in conference 
 of 1892, 377, 382, 400. 
 
 Trade, balance of, 294, 328, 357 ; de- 
 pression of, in England, 255, 330,421 ; 
 commission on, in England, 258, 341, 
 342. 
 
 dollar, suggested, 100; provision for, 
 121; depreciation of, 155; legal-tender 
 quality of, 160. 
 
 UNITED STATES, coinage of, 10-17, 60, 
 66, 122, 130, 156, 180, 187, 264, 267, 309, 
 356, 423 ; opposed to double stand- 
 ard, 16, 22, 65, 71, 120, 153-155; gold 
 standard desired in, 16, 112, 153 ; gold 
 standard accepted in, 35, 43, 88, 93, 
 120 ; makes metric system legal, 38 ; 
 asked to join Latin Union, 38; in con- 
 ference of 1867, 49, 59, 65, 71, 76, 
 80 ; and Canada, 61, 314 ; repudiation 
 movement in, 95 ; act to strengthen 
 public credit, 96 ; Greenback party 
 In, 151, 168, 177; steps for uniform 
 coinage, 12, 19, 37, 92, 93, 100, 113; 
 discovery of demonetization of silver 
 in, 152-157 ; free-silver movement in, 
 begins, 160 ; Silver Commission, 161- 
 167 ; campaign of 1877, 169, 178 ; 
 seeks bimetallic conferences, 186, 338, 
 346, 459 ; in conference of 1878, 204, 
 209, 235-244, 247 ; bond sales and re- 
 sumption, 153, 170-190, 263 ; imports 
 and exports of gold, 267, 327, 337, 
 
 354, 422; in conference of 1881, 271, 
 2?2, 292, 311 ; circulation in, 1 1, 13, 15, 
 112, 152, 198, 329, 336, 355, 364, 425 ; 
 commerce with Germany, 328 ; im- 
 ports and exports of silver, 867 ; 
 foreign debt of, 357, 441 ; in con- 
 ference of 1892, 377, 380, 392, 397, 
 399, 402, 405, 406; political condi- 
 tions in, 409 ; initiative in opening 
 mints to silver, 437, 459, 462 ; panic of 
 1893, 425 ; gold reserve and bond 
 sales, 354, 375, 425, 428, 440; silver 
 craze of 1895, 439 ; elections in 1896, 
 442 ; Wolcott Commission, 459. /See 
 Act, Silver, Debt. 
 
 VAN DEN BERG, Dutch delegate in con- 
 ference of 1892, 377, 399, 400. 
 
 Vest, Senator, resolution of, forremon- 
 etiziug silver, 258. 
 
 Vrolik, A., Dutch delegate in confer- 
 ence of 1867, 49; position in 1878, 
 222 ; in conference of 1881, 270, 295. 
 
 WALKEU, F. A., criticism of Ruggles, 
 41 .; United States' delegate in con- 
 ference of 1878, 204, 211, 235, 247. 
 
 Warner, A. J., silver bill of, 256. 
 
 Weber, Belgian delegate in conference 
 of 1892, 377, 400. 
 
 Welby, Sir R. E., member Indian Cur- 
 rency Commission, 373. 
 
 Wheat, Indian exports of, 331 ; price of, 
 457, 465. 
 
 Willard, G., member of United States' 
 Silver Commission, 162, 164, 166. 
 
 Wilson, Sir Rivers, British delegate in 
 conference of 1867, 49, 73, 79 ; secre- 
 tary of commission on uniform coin- 
 age, 101 ; in conference of 1892, 376, 
 382, 398, 407. 
 
 Windom, Secretary, plan of, for silver 
 purchases, 364-3*66, 369. 
 
 Wolcott, Senator E. O., anticipates a 
 conference, 438; negotiations with 
 European powers, 459. 
 
 Wolowski advocates bimetallism, 140, 
 144. 
 
 ZOLLVEREIN, German coinage, 9 ; Cen- 
 tral European, 338, 463. 
 
 THE EXD
 
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