Papers Relating to the Foreign Relations of the United States, Transmitted to Congress with the Annual Message of the President, December 4, 1871
Mr. Rublee to Mr. Fish.
Sir: I have the honor to submit the inclosed correspondence with the federal council of Switzerland on the subject embraced in your dispatch No. 13, of the 13th of June, 1870. The delay in the response of the federal council is the result of its preoccupation with the events and consequences of the recent European war. The brochure, referred to several times in the report of Mr. Feer-Herzog, which accompanies the reply of the federal council, was transmitted by me to the State Department with my No. 22, of the 24th of August last.
I am, &c.,
Mr. Rublee to Dr. Dubs.
The undersigned, minister resident of the United States of America in Switzerland, begs leave to transmit to his excellency the President of the Swiss confederation and chief of the political department thereof the inclosed copy of a dispatch from the Secretary of State of the United States respecting, the adoption of a common unit and standard of an international gold coinage. I am therein instructed to say that the Government of the United States, at the request of the Senate, invites the government [Page 873] of Switzerland to express its views upon the subject in question, with the purpose of promoting the adoption of such a common unit and standard; and, further, that the President of the United States will deem it his duty, under the resolution of the Senate requesting him to invite this correspondence, to transmit to that body any communication which the government of Switzerland may be pleased to make in relation thereto.
The undersigned seizes this occasion to renew to your excellency and to the high federal council the assurances of his highest consideration.
[Translation.]
With the note which the minister resident of the United States addressed to the federal council on the 5th of July, 1870, he transmitted a copy of a paper from the minister of foreign affairs concerning the unification of gold coin and invited the council to communicate to the Government of the Union its opinion upon this important question, with the object of effecting the earliest possible solution of it. The federal council has, in consequence, the honor to transmit herewith to Mr. Horace Rublee a copy of a report on this subject made to the federal department of finance by Mr. Feer-Herzog, of Aaran, a member of the national council and a man extremely well versed in the question. The federal council will unite with pleasure in the efforts which are the subject of the Senate resolution of the 1st of February and of Mr. Fish’s dispatch of the 13th of June, 1870. However, it must be observed that the council does not perceive any possibility of a solution in the system No. 2, (Kelly-Elliot,) explained in the dispatch, and that the mere monetary approximation, (rapprochment,) which is the purpose of system No. 3 of the dispatch, will not, in the judgment of the federal council, produce the useful results which the author of the dispatch seems to anticipate from it; that, hence, the federal council recommends to the very serious attention of the Government of the United States system No. 1, monetary unification by means of simple equations between the principal existing types, conformably to the plan of the conference of 1867 and to the bill introduced in Congress by Mr. Hooper. In conclusion, Switzerland must occupy the special position imposed by the monetary convention of 1865, and which does not permit her to act definitely except in concert with her present monetary allies. The federal council renews, &c.
In the name of the federal council,
The Vice-Chancellor, I. Kern German.
[Translation.]
The events of the war will probably explain to you why I have so long delayed the submission of the opinion which you have requested on the dispatch of Mr. Hamilton Fish, dated June 13, 1870, relative to monetary unification, and transmitted to the federal council by Mr. Rublee on the 5th of the following July.
The step of Mr. Fish is a consequence of the invitation addressed to Mr. Grant by the Senate of the United States to enter into correspondence with foreign powers for the establishment of a common unit and an international coinage. Having already announced this step in a brochure that I published in May, last year, under the title, “La France et ses alliés monétaires,” (see page 17.) in which I considered the questions treated of in the dispatch of the United States, I think I may abbreviate by referring to the said work for a more extended development of the subject, and confine myself to the succinct exposition which follows:
The American dispatch is not limited to asking the opinion of the governments to whom it is addressed, but it sets forth at the same time the conditions to which a common coinage should conform.
1st. That it must not vary, or as little as possible, from the existing coinage of the United States.
2d. That it must be acquiesced in by Great Britain and by the countries that have adopted the franc of France.
3d. That gold must be made the sole standard, and that the double standard must be discarded.
The dispatch then proceeds to elucidate the several systems which seem to be more [Page 874] or less adapted to realize this programme in a manner more or less complete, and to some extent indicates an opinion upon them. These systems are—
I. That of the conference of 1867, which consists in taking as a common denominator the gold value of the 5-franc piece, (1.4561 grains, pure gold, or 1.6129 grains, gold of nine-tenths fineness,) and to effect some slight modifications in the unit of other nations. The modifications required would be a diminution of 3½ per cent. in the American dollar, making it the equivalent of the 5-franc piece; a diminution of .008 in the English sovereign, making it the quintuple of 5 francs; an augmentation of 1 per cent. in the Austrian florin, making it equivalent to one-half of 5 francs; finally, Germany, conformably to the propositions of her Handelstag, would adopt a florin similar to that of Austria. The international coinage would then he represented by—1st. In France, a 25-franc piece; in England, a sovereign; in Germany and Austria, a 10-florin piece; in the United States, a half eagle, or $5; all identical in value, in weight, and alloyage. 2d. By the multiples and submultiples of these pieces. This system, warmly recommended by Mr. Ruggles, commissioner of the United States at the conference of 1867, forms the basis of a bill introduced in Congress by Representative Hooper, of Massachusetts. Mr. Fish, however, alleges that the modification of the dollar contemplated by this system is so considerable that the Government of the United States cannot resolve upon it until first satisfied that Great Britain will make a corresponding modification in the sovereign.
II. The Kelly-Elliot system is mentioned in the second place. The American dollar contains 1.5046 grains fine gold. Messrs. Kelly and Elliot propose to reduce it to 1.500 grains, an insignificant change, which would give the dollar a round number in grammes of fine gold. This modification would produce the equation upon which the authors of the plan so much rely: $20=3 German crowns. By increasing the franc about 3 per cent., and the pound sterling 2½, we should again have equality between $20,100 francs, and 4 sovereigns. A bill embodying this system has been introduced in Congress by Mr. Kelly, but that body has not yet taken action either upon it or the concurrent bill of Mr. Hooper.
III. The author of the American dispatch, appearing to think that the second system demands too large an augmentation of the franc and the sovereign to be relished in France and England, just as he himself shrinks from the diminution of the dollar proposed by the conference of 1867, asks if it is not possible to realize, up to a certain point, the advantages of a common coinage, without wholly abandoning special coinages, and he thinks this result may be obtained, without sensibly changing existing coinages, by establishing a common measure or divisor of these coinages. This divisor would be the decigramme of pure gold. The fractions of decigrammes in each special coin would be dropped, and such coin henceforth would be made to contain a certain weight of fine gold reckoned in round decigrammes. The half-eagles, or $5, would be reduced from 75.232 to 75 decigrammes, &c. (See page 11 of the dispatch.) The decigramme would then be a common normal measure. The number of decigrammes of fine gold which they (the coins) contained would be indicated upon the exterior of the pieces, and the reciprocal value of coins, in international exchanges, would be determined by the decigrammes of fine gold that they represented.
Before pronouncing upon these three propositions, I ought to remark that the dispatch in a memorandum annexed classes the countries in which the dollar, the franc, and the sovereign are employed, in a manner altogether arbitrary. It enlarges the domain of the sovereign by assigning to it the East Indies, which have the rupeer and not the sovereign; and China and Japan, where the sovereign does not exist, under the pretext that most of the drafts drawn upon Europe in those countries are expressed in pounds sterling. In order not to lessen the dollar, he adds also China and Japan to the domain of the latter, on the pretext that the Mexican piastre, closely approximating to the dollar, is the denomination in use in the seaports of those countries. Finally, he adds Germany and Austria as having a like system, which is incorrect. I oppose, on my part, to this comparative table that of another American, Mr. Ruggles, reproduced on page 80 of my brochure, and which, properly leaving Asia out of the question, as having nothing to do with the comparison, proves that, in respect to population, to existing currency, and to international commerce, the group of the franc of France is by much the more considerable. I propose that the federal council call the attention of the Government of the United States to this table, (extract from a brochure, entitled International Coinage, by Samuel B. Ruggles, 1870, New York, and prepared by the author from figures furnished him by the English board of trade.)
The showings of this table explain why the governments that have adopted the French franc are expecting other peoples to approximate to the franc rather than they, themselves, to approximate to a foreign unit. The gold coins of the French system are the most numerous, the most generally diffused, and the most acceptable. The sovereign requires much less change to adapt itself to the franc than to conform to the dollar, as proposed by the Kelly system. The monetary system of Germany is on the eve of being reformed, and the most popular and most national reform, that which preserves the small German units of reckoning, (page 22 of my brochure,) is its adaptation [Page 875] to the franc by means of the florin of the value of francs 2.50. It is true that to make the American dollar equivalent to 5 francs requires a diminution of about 3 per cent. in the dollar. But this reduction would not cause serious inconvenience, as the dispatch alleges, (page 5,) to the American people, because all existing credits would be reduced proportionately to the change in the dollar, and the price of commodities raised in consequence. Finally, the gold coinage of the United States has been attended by a profit, the mint tax being ½ per cent. The withdrawal of the existing gold coin would not, then, cause any loss to the State in respect to the expense of mintage; neither would there be any loss on account of wear, the present monetary laws of the United States not requiring the Government to withdraw gold coin depreciated in that manner. The demonetization, then, of the coin now in circulation will produce no loss to the Government, because the pieces may be withdrawn upon paying to the holders the weight value. Finally, the great part of the business transactions within the country, having for a long time been carried on in paper dollars, of a varying value, the fixity of value of the gold dollar does not possess for the habitudes of the citizens of the United States the signification which the fixity of the monetary unit would have in countries with an exclusively metallic circulation, that is to say, where a legal tender in paper does not exist. The Kelly-Elliott system, that the American dispatch places by the side of that of the conference of 1867, belongs in the category of those that would, at any price, establish monetary unification upon a quantity of gold capable of being metrically expressed without running into a fraction. I object to it, in the first place, that if the dollar can, without any inconvenience whatever, be reduced to 18.500 fine gold, its rapprochement to the other types will not be thereby further advanced. The equation, 30 grammes fine gold=$20= three German crowns, which constitutes the great argument of the authors of this system, does not produce monetary unification at all, since the German crown, despite this equation, will never be divisible by the dollar. Moreover, this crown, (10 grammes of fine gold alloyed to nine-tenths,) created by the convention of 1857, is a coin that has no commercial role, since it does not harmonize with the currency in usage on the continent, and is condemned by a majority of German authors. It would need to become the basis of the new German system to give any value to its relation with the dollar, and in spite of the recommendations of some theorists, there is very little probability that Germany will adopt a unit which is worth 34.44 francs, or 9 thalers and 9 silbergroschen, and the decimal subdivision of which would never conform to the subdivision of the thaler or the florin, which would destroy all connection with the ancient monetary systems, and oblige the public to guess the values of things, or to reckon by means of factors entirely new to it. Finally, it seems impossible that the pound sterling should be augmented by 2½ per cent., the franc by 3¼, in order to conform to the Elliott equation: $20=100 francs=4 pounds. For, it must be observed, it is easier to effect an adaptation by a diminution of the existing unit, it being exceedingly difficult to accomplish it by increasing those units. I propose, then, to the federal council, the categorical rejection of the Kelly-Elliott combination. The third system mentioned in the dispatch remains to be considered. I freely concede that the point of view which forms the basis of this system is very reasonable. In case a veritable unification be impossible, if the Englishman will not renounce his sovereign, the Frenchman his franc, the American his dollar, and if each refuse to adopt the modifications necessary to render his type the equivalent, the multiple or the submultiple of the others, a relative progress would be attained in finding a common measure, and it seems, indeed, by the table on page 11 of the American dispatch that, with slight changes, the decigramme of fine gold would furnish each a common measure. The governments having once adopted it, the decigramme of fine gold contained in each coin, as indicated on it, would supply the necessary means of reduction required for their circulation and change. Unfortunately, this proposition, just in theory, loses its greatest value as soon as it is brought into practice. Coins are not composed of fine, but alloyed gold. If the half-eagle be reduced to 75 decigrammes of fine gold, and the Napoleon to 58, these round figures again become fractional when a ninth of alloy is added in order to secure the standard termed nine-tenths. It follows that the verification by weight is no longer practicable, and that the simple comparison derived from the inscription of the decigrammes of fine gold cannot be established by weighing. Everybody will agree that the absence of such a test forms a capital objection to system No. 3. This objection is so much the more grave since the coins composing the table on page 11 of the American dispatch are quite differently alloyed, viz:
| The English sovereign and the Russian imperial | 916 |
| The Napoleon, American, eagle and German crown | 900 |
| The Friedrick d’or of Prussia | 896 |
| The old doubloon of Spain | 875 |
And it is evident that with such divergences the verification of the weight of the coins in fine gold would become so complicated that the quantity on which the system [Page 876] reposes would prove illusory. In order to attain the character of surety essential to the success of the system, the weight even of the coin should coincide with its inscription. In other words, it would be necessary that the common measure, which the plan seeks to find in the decigramme of fine gold, should be the decigramme of an alloyage universally adopted, that of nine-tenths for example. The governments disposed to agree in this respect would then be obliged—(a.) To adopt the alloyage of nine-tenths if they did not already employ it; (b.) To suppress the fractions of decigrammes in the weight of their coins expressed in decigrammes of nine-tenths fineness. In this case
| The Napoleon, of nine-tenths, and weighing 64.516 decigrammes, would be diminished by | .008 |
| Half-eagle, weighing 83.570, would be diminished by | .007 |
| The sovereign, changed to nine-tenths, weighing 81.360, would be diminished by | .0044 |
| The Russian half-imperial, weighing 66.652, would be diminished by | .010 |
Thus the reductions become more considerable than is calculated in the table on page 11 of the dispatch, and nearly average those imposed by the conference of 1867. We have, then, the choice, at the cost of derangements and modifications that are not far from equal, between a scheme which would produce these relations:
Decigramme 9/10 = 20frs./64 = $5/83 = 1 sovereign/81 = half-imperial/66
or, the equation which would result from the plan of the conference of 1867, as follows:
25 frs. = $5 = 1 sovereign; and 20 frs.= 5 rubles.
The simplicity of these last relations is such that I think this plan merits the preference, in view of its convenience for calculations. But it merits it, above all, for the reason that it allows the creation of international types, having everywhere legal circulation, while it is impossible to produce such types under the system No. 3.
Please to accept, &c., &c.