No. 496.
Mr. Gorham to Mr. Fish.

No. 129.]

Sir: The most engrossing subject the Netherlands government has had under consideration for some time past, next to that of the war in [Page 777] Sumatra, has been the question of changing the money system of the country.

In October, 1872, a commission was appointed to consider the change that was taking place in neighboring states by substituting gold for silver as currency, and to suggest such remedies as might seem expedient to counteract any influence prejudicial to the Netherlands likely to arise therefrom.

The commission reported in January of that year, recommending substantially the system in use previous to 1847; i. e., one standard of silver and one of gold, with a relative value of 15.5 to 1. But in October, when the policy of Germany had become more apparent, the committee made a second report, in which they strongly urged the adoption of the gold standard only.

On the basis of the committee’s second 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 unit of account, 0.60561 grammes fine, valued, as against silver, at the rate of 1 to 15.604.

In supporting the bill the minister urged that silver was likely to depreciate in consequence of the amount being offered in the market, Germany was selling largely, and Belgium was preparing to do so, with an evident intention to discontinue its use as a standard of currency; that being démonétisé in neighboring states, it would naturally accumulate where it was legally recognized as the circulating medium, and that the Netherlands, already financially isolated, by adhering to their present system would experience a growing inconvenience from which relief would become more and more difficult.

On the other hand, objection was made that the bill did not apply to the colonies; that the old standard for them and a new and different one for the mother-country was equally unnecessary and unwise, and that it would be better to defer action until an expression from the colonies could be obtained.

The widest difference prevailed, however, in regard to the fineness of the contemplated issue. That proposed by the government corresponded neither with the Anglo-German standard nor the so called Latin league, being above the one and below the other. Some of the members had weighty reasons for joining the first named, others were equally strenuous for conforming to the last, while not a few clung to the standard named in the bill, mainly, it would seem, because it was identical with or came nearest to one used by their fathers at some former period.

Having repeatedly discussed the project, and lastly for a number of days in succession, it was finally resolved to divide article 1 so that the sense of the chamber might be taken on the proposition to introduce a gold standard and on the rate of alloy separately, and that the second should be the first tried.

Accordingly, after several amendments had been offered and rejected, the question of alloy was put to the test; 29 voted for it and 40 against it. On learning the result, the minister immediately withdrew the bill, observing that ‘further discussion would be of no avail. There is therefore little probability of an immediate change in the monetary system of the Netherlands.

I am, &c.,