No. 195.
Circular instructions sent to the legations of the United States at London, Paris, Berlin, Vienna, Madrid, Brussels, Copenhagen, Florence, The Hague, Lisbon, Stockholm, and Berne.
Sir: The Senate has requested the President “to invite a correspondence with Great Britain and other foreign powers, with a view to promote the adoption, by the legislatures of the several powers, of a common unit and standard of an international gold coinage.”
I presume that it will not be necessary to present to the enlightened governments with which this correspondence is invited any considerations in favor of the adoption of such a common unit and standard. That it will simplify the daily business transactions of the world, and that it will bring into closer communion the nations that adopt it, is manifest. The Government of the United States, therefore, in opening this correspondence, at the request of the Senate, limits itself to the presentation of the objections that have been hitherto raised against such unification, in the hope that some plan may be devised which will obviate them. In doing this we must necessarily regard the subject, primarily, as it effects our own commerce and trade.
The principal part of the trade and commerce of the United States is carried on with four groups of countries:
First. Those in which the accounts are rendered and settled in sterling currency.
Second. Those in which they are rendered and settled in francs.
Third. Those in which they are rendered and settled in the North German unit of account.
Fourth. Those in which they are rendered and settled in dollars.
In commenting upon the commerce with these several countries, I shall adopt for convenience the returns for the year 1867, and I shall make the statements in round numbers.
The first of these groups comprises the United Kingdom of Great Britain and Ireland, the various British colonies and dependencies, India, China, and Japan. I add the last two countries to the list, because I understand that most of the settlements are made in sterling bills, although the accounts are kept in Chinese taels or Mexican dollars. Our aggregate annual domestic exports to these countries are about $275,000,000, and our aggregate annual imports from the same countries are about $220,000,000.
With the countries in which the franc is the unit of account, viz., France, Italy, Switerland, and Belgium, the dealings of the United States are less extensive. The domestic exports to these countries are about $57,000,000, and the imports from them are less than $50,000,000. [Page 241] It is to be remembered, however, in this connection, that Austria, Greece, and Sweden have adopted, or propose to adopt, a unit of gold coinage which can be expressed in a given number of francs. I do not understand, however, that they propose to adopt the French system of money.
The exports to the third group of countries amount to $27,000,000, and the imports from them to $26,500,000.
When it is remembered that the entire imports of the United States are about $418,000,000, and the entire exports are about $440,000,000, it will be seen that the commerce with the countries comprised in these three groups amounts to more than three-fourths of the whole foreign trade of the country, and that the commerce with the first group only is more than one-half the aggregate foreign commerce of the United States.
The fourth group includes the United States and their Territories, with all their domestic commerce, and also such neighboring dominions of other powers as have practically adopted the dollar standard. In magnitude this trade far surpasses all the others combined. Its results are expressed in the permanent capital of the country. A change in the value of the unit of account affects not only all this commerce, but also all the contracts for the payment of money in the United States, including the national debt, and the value of all the permanent capital of the country. Any material change in the unit would render necessary a series of computations, which would occasion an amount of inconvenience to the population of the United States for which the benefits they would receive from the change would scarcely compensate.
The same may be said of the effect of a material change in the value of its unit of account upon the domestic trade and property of each of the other groups of countries.
If, therefore, the idea of “a common unit and standard of an international coinage” is to be carried to the extent of an absolute identity in the coins, it will be necessary to seek for a basis of unification which complies with the following requisites, so far as it may affect the coinage of the United States, and, probably, the same may be said, mutatis mutandis, as to Great Britain and France:
First. It must be one that does not materially vary from the existing coinage.
Second. It must be one that will be acquiesced in by the government of the United Kingdom, and by the countries which express their values in francs.
It would also be extremely desirable, though not absolutely essential, so far as the interests of the United States are concerned, (whose commerce is mainly with the powers whose values are expressed in sterling or francs,) that it should be acceptable to the other leading powers.
It is also indispensable that gold should be made the sole standard. France still adheres to the double standard; but, in the opinion of the Government of the United States, it will not be practicable to unify the coinage of the world on the basis of a double standard. The resolution of the Senate aims at a correspondence for the unification of gold coinage only.
Several attempts have been already made to secure the desired uniformity.
The coinage of Belgium, Switzerland, and Italy was assimilated by convention in 1865 to that of France, and the issues of each country regulated thereby; and it has been assumed that the uniformity, so easily secured in these territories, may be extended with equal ease. But it [Page 242] is to be observed that the formation of the kingdom of Italy out of a number of independent sovereignties, with a heterogeneous medley of coinages, afforded an occasion and an opportunity for remodeling the coinage of that country which does not exist with the United States or with the United Kingdom. No reasoning, therefore, can be drawn from the example of Italy.
In the International Monetary Conference held at Paris in 1867, on the invitation of the French government, this subject was elaborately considered. The government of Great Britain was represented by Mr. Graham, the director of the royal mint, and by Mr. Rivers Wilson, attached to the treasury. The Government of the United States was represented by Mr. Samuel B. Ruggles, one of its most eminent statisticians.
That conference determined unanimously (voting by states) “against the creation of an entirely new system, independent of existing systems,” and in favor of the mutual coordination of existing systems, taking into account the scientific advantages of certain types, and the numbers of the population that have already adopted them.’’
It was also determined, with like unanimity, that the monetary system established by the convention of 1865 should be the one to be principally considered by the conference.
It was decided to recommend gold for the standard, with silver as a transitory companion, and to adopt as the common denominator, for the basis of the desired assimilation, the weight of five francs in gold of nine-tenths fineness. On the last question the vote of England was recorded in the negative, and the vote of the United States in the affirmative.
It was unanimously determined to adopt the twenty-five-franc piece, with which it was supposed that the American half-eagle and the British sovereign could be made identical in form, size, weight, and fineness, so that, in the language of Mr. Buggies, they “would readily circulate side by side with the French twenty-five franc piece on conditions of perfect equality.” The values of the dollar and the cent, of the shilling and the penny, were, under this scheme, to be all changed and made to conform to the new measures.
I inclose a copy of the report of the proceedings of the conference, prepared by a French delegate, M. de Parieu, vice-president of the council of state, member of the institute, and vice-president of the conference.
It is understood in Washington that the British government has not yet shown a willingness to give its adhesion to the plan proposed by the conference, notwithstanding the favor with which it was received by the delegates of Great Britain in Paris. We are informed that that government is not disposed to adopt the proposition while a double standard is maintained in France. Nor has the Congress of the United States shown a disposition to authorize the Executive Department of this Government to reduce the values of the coins of the United States to the proposed measures.
The plan of the conference would, if adopted, make a greater change necessary in the coinage of the United States than in the coinage of the United Kingdom. The reduction in the value of the gold dollar would be about 3½ per cent., which would put the people of this country to great inconvenience in their business.
The Senate, having before it a bill aiming at the adoption of the recommendations of the monetary conference of Paris in the coinage of this country, after full consideration, disposed of the subject by referring [Page 243] it to this Department in the manner I have already indicated. This was done on the motion of the distinguished chairman of the Committee on Finance, whose letter to Mr. Ruggles in Paris had more, perhaps, than any other cause, given vitality to the scheme proposed by the conference.
The House of Representatives has before it two bills. One of these, introduced and advocated by Mr. Kelley, of the Committee on Coinage, Weights, and Measures, proposes to substitute for the present system of coinage what is known here as the dollar system, to which I shall soon allude. The other, introduced by Mr. Hooper, of Massachusetts, aims to carry into effect the recommendations of the Paris conference. But, in a speech in the House after the introduction of this bill, Mr. Hooper said, “Any change of coinage, so great as to be accounted for, involves an inconvenience in the payment of prior contracts, and particularly in the payment of the interest and principal of public and corporate debts, which inconvenience is thought by some to be very much greater than the international convenience arising from conformity of coinage. The whole question appears to demand that an attempt should be made to arrive at some agreement with Great Britain for an international coinage, in which the nations of continental Europe could be reasonably expected to join at no distant period.”
Both bills were referred by the House to the committee; and it would appear reasonable to conclude that the House, as well as the Senate, is not disposed to adopt the suggestions of the Paris conference without further communication with the British government.
Without expressing on behalf of the Executive Department of this Government a decided opinion upon the merits of the franc system, I may say that, if there is to be unification, the Government of the United States would prefer a scale assimilating nearer to its present system. In any event, the extent of the dealings between this country and Great Britain makes it proper that, before the President can consent to recommend Congress to subject the citizens of the United States to the annoyance, inconvenience, and loss which maybe caused by a large depreciation in the national measure of values, he shall have assurance that the assent of her Majesty’s government can be relied upon.
Another scheme for unification which has been presented to the consideration of this Government has been already referred to as the dollar scheme. This scheme proposes a reduction in the value of the dollar of three-tenths of 1 per cent., in order to make the coin of metrical weight, so that three dollars coined of nine-tenths fineness shall weigh five grams, while two dollars shall contain three grams of fine gold. It also contemplates that the British penny shall be equivalent to two metric cents, and that the sovereign and a new French coin of twenty-five francs shall each be brought to the weight, fineness, size, and value of the half-eagle as reduced.
This plan is one very favorable to the United States. The change is within the mint tolerance, and need not be accounted for. It would also adapt itself without change to the new German system of coinage, two eagles being equal to three vereinskrone.
Should the governments of Great Britain and France be disposed to join the Government of the United States in recommending the adoption of this system, the President is prepared to advise Congress to adapt the coinage of the United States to it.
But we cannot shut our eyes to the fact that it may not meet with favor in Great Britain, when it calls for an increase in the value of the [Page 244] gold coins of about 2½ per cent.; nor in France, where it requires an increase of 3¼ per cent.
Should it be found that neither of these schemes can be made acceptable to all the powers, and that no other plan can be proposed which is likely to be adopted, perhaps a way may be found for securing “a common unit and standard” by an assimilation without an absolute unification in the coinage.
The schemes which I have been considering contemplate absolute identity of coinage in some common coin. It must be conceded that this is theoretically to be desired. But as it may be impracticable for the moment, this Government suggests a basis which, though theoretically less perfect than an absolute unification of coinage, may practically secure some of its benefits, and lead to more important advantages.
It is to be observed that an identity in the measures of values in the different countries will not completely attain the beneficent results which are sought, unless there be also an identity in weights and measures.
The comparatively few persons of each country who travel into the dominions of the other powers, and spend there the money which sometimes had better be spent at home, might and probably would find their means slightly increased, and their annoyances decidedly decreased; but in commercial transactions an identity in the measures of values would be of comparatively little use, if unaccompanied by an identity in the measures of the quantities to which those values are applied. There would still be a necessity for the intervention of an expert to shift the expressions of the measures of quantity from the terms used in the one country to those in use in the other. The resolution of the Senate does not contemplate the extension of this correspondence to these points, nor, in my judgment, would it be desirable to do so.
It would probably not be difficult to induce the people of different countries to adopt a common standard of weights and measures, so far as perishable property is concerned. At first the adoption of unaccustomed systems might cause inconvenience and discontent; but if they should prove to be better than the old ones, and if they should have the further advantage of being common to several countries which possess a common standard of values, and which have extended commercial relations, it is probable that the inconveniences would be patiently submitted to, in view of the greater benefits to be derived from the change.
But it seems to the Government of the United States that a forced change in the measures of distance, as applied to imperishable property and to permanent investments of capital, may be attended with more serious inconvenience. Thus, while it may be practicable to establish a new standard of length measure for articles of international commerce, such as textile fabrics which are consumed and do not remain, it may be more difficult to make the same change in the standard for permanent values. A few examples will demonstrate the difficulties that would probably attend a change in such measures in this country, and it is supposed that similar if not equal inconveniences would happen elsewhere.
It is the custom in the United States to lay out all the towns and cities in regular quadrangles, and to divide each quadrangle into an even number of lots, with an even number of feet. This has been found a convenient mode of dealing in town and city lots and in town and city houses. To make an arbitrary change which should abolish these measures and substitute different ones in their places, involving the use of fractional numbers, would occasion great inconvenience, and might check [Page 245] the dealings in this species of property, and thus cause a loss to those who happen to be holders at the time of change.
Again, the whole system of titles in those States which have been created out of the public domain rests upon Government surveys, whose, results are expressed in the English mile and its subdivisions of rods, feet, and inches. To substitute a different expression for these measurements would be a work of serious magnitude.
Again, the manufactories of the country are filled with machinery, whose delicately adjusted parts, measured by feet, inches, and component parts of the inch, work together in one grand whole, which is in its turn combined in the same system of measures. To produce this machinery, thousands of shops are filled with costly plans, adjusted upon the same scale, whose delicate operations often require a nicer determination of measurement than can be obtained without mechanical aid. To transmute these measurements, so delicate and so accurate, from their present system into a new one, would appear to be an almost endless labor, if indeed it be a possibility.
Examples might be multipled, and will probably occur to the enlightened government of ——. They serve to show that, while in theory much to be desired, it is possible that the different powers will not succeed so easily in assimilating their several standards of length for permanent values as in securing uniformity in their systems of weights and of lineal measures, as applied to articles of commerce.
Accepting this possible result with reluctance, and drawing from it the conclusion that unification of coinage, or even identity in the value of a unit, may not be so easily attained, and will, if attained, have a proportionately less importance, the Government of the United States invites the —— government to consider whether, without seriously disturbing the coinage of the leading commercial nations, and without changing the nomenclature and relative values in the domestic coins to which the several peoples have become accustomed, it may not be possible to arrive at an assimilation of coinage which will secure many of the advantages that can be obtained without a uniform system of weights and measures, and which may lead hereafter to complete unification.
It must be borne in mind in this discussion that, so long as exchanges of commodities exist, the system of payments therefor in bills of exchange (which ordinarily represent values of commodities of the one country transferred to the other) must also continue to exist. It is not probable, that even an absolute identity of coinage throughout the world would do away with this medium of payments. The hope that such would be the case would probably prove illusory.
The object we seek to attain is a common measure, which can be expressed in the existing coinages of the leading commercial nations without materially affecting the actual values of the several coins.
Different rules pravail at the different mints in many respects. In some there is a mint charge; in others, none. In some the coin is of nine-tenths fineness; in others, of eleven-twelfths. Were we now seeking uniformity in the weight, appearance, and value of the coins, it would be necessary to adopt common rules in these respects. But it is supposed that the several powers may be averse to surrender their respective systems unless complete uniformity can be secured.
The Government of the United States suggests, for the consideration of the several powers, whether all that is herein contemplated may not be attained without an abandonment of the different mint systems. It suggests (for consideration only, and not as the best theoretical solution [Page 246] of the question) that the international value of the coins of the nations that may become parties to any monetary convention, or who may in any other way arrange this question between themselves, shall be de termined by the quantity of pure gold which it contains, which measure shall be expressed in a common standard of weight upon its face; and that, unless absolute unification can be obtained, all other questions of coinage be left to local law and experience. The French decigram is suggested as the most convenient common measure by which to determine this quantity, and that it is desirable, if possible, to avoid running this expression into a fraction.
The Government of the United States suggests (also for consideration only) the following as a practicable table:
| Country. | Denominations of coin. | Present weight in decigrammes and decimal fractions of pure gold contained in coin. | Proposed weight of same. | Percentage of change. |
| United States | Half-eagle | 75.232 | 75 | -3-10 |
| Great Britain | Sovereign | 73.224 | 73 | -⅓ |
| France | Napoleon | 58.065 | 58 | -1-12 |
| Prussia | Frederick d’or prior to 1858 | 60.302 | 60 | -⅓ |
| Austria | Double ducat | 68.838 | 69 | +¼ |
| Müntzverein | Crown | 100.00 | 100 | |
| Russia | Half-imperial | 59.987 | 60 | +1-30 |
| Spain | Doubloon of 10 escudos, since 1864 | 75.483 | 75 | -⅔ |
These suggested changes are slight, and need scarcely be accounted for. If adopted, they afford in the decigramme an international unit which will be easily convertible from one expression into another, and fine gold is made the standard, without reference to the quantity of alloy.
I inclose a copy of the resolution of the Senate requesting the President to invite a correspondence on this subject, and also a memorandum of the population of the four groups of countries hereinbefore referred to.
You are instructed to leave a copy of this paper with the minister for foreign affairs, and you will say that the Government of the United States, at the request of the Senate, invites the government of —— to express its views upon the subject of a common unit and standard of an international gold coinage, with a view to promote its adoption. You will also say that the President will deem it his duty, under the resolution of the Senate, to transmit to that body any communication which that government shall be pleased to make on these subjects.
I am, sir, very respectfully, your obedient servant,