No. 94.
Mr. Hitt to Mr. Fish.

No. 1460.]

Sir: I have the honor to transmit herewith a letter on the metallic standard of currency, by Mr. E. de Parien, published in Le Français on the 24th ultimo, and addressed to Mr. Washburne, being called forth by Mr. Washburne’s dispatch to you, No. 1307, of date March 27, 1876, which was published in the Foreign Relations of the United States, 1876, page 109, and republished in French in Le Steele of the 29th of January last.

Mr. de Parien is a statesman who has been honorably known in French politics for thirty years as a legislator, cabinet minister, and now senator; is a member of the Institute, and the author of various works of high reputation in jurisprudence and political economy.

I have, &c.,

R. R. HITT.
[Inclosure.—Translation.]

[From Le Français, Saturday, February 24, 1877.]

Mr. E. de Parien, senator, has addressed to Mr. Washburne, the minister of the United States, at Paris, the following letter:

Sir: In a remarkable note, which is republished in the Siècle of the 29th of January last, you depict the state of the monetary question in Europe, and you intend this picture for the information and study of your countrymen.

It was an enlightened and cosmopolitan thought which led you to this patient examination of questions heretofore too little studied, and to which you have called the attention of your government.

The honor you do my works in citing them several times in the course of your own emboldens me to submit to you some views not only on the points which you have discussed, but also on some facts connected with the monetary question, and especially the facts which have recently taken place in your own grand and interesting country.

You examine with the ardor of a patriot, as well as of a philanthropist, “the great monetary problem now impending over the world,” to use your own expression, and on this subject you pass in review the arguments of the bimetallists and of the monometallists, doing me the honor to count me among the latter.

I have heretofore had occasion, sir, to protest against the application of the term monometallism to the doctrine of a single gold standard, as it is practiced in Great Britain, and as I have advocated it with my feeble voice in France. To wish a single standard, a single currency which should be legal tender to an unlimited amount, is not to wish that there should be but one metal in the monetary system.

Silver plays an important part still in the single gold standard system practiced in England, and I have had occasion to state that the doctrine of a single gold standard is in fact reconcilable with a real and perfectly reasonable trimetallism, admitting the use of silver and copper under different limits below gold.

Permit me, therefore, to reject the use of this word monometallism, an invention of the adversary, who is pleased to give an exaggerated and absurd appearance to the most reasonable of doctrines.

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But I wish to offer a sort of rectification, or at least of attenuation, on a point still more important—one of the points of view prominent in your learned discussion.

Yes, sir; while we may seek the advantages of a common currency among nations, we may admit that the monetary problem is not absolutely identical among them all.

Money has incontestably a relation with the prices in use in different nations, and with their economic condition. There have been some at times who have treated with disdain the aphorism Of General Mansfield in his work on money, that iron is the monetary metal of a people extremely poor, copper that of a people who are poor, silver of a people who are well to do, and gold of a people who are rich.

For my part I consider this remark profoundly sensible. Among a half-barbarous horde, where there is no trade except in simple articles of food and a few coarse tools, what would one do with a gold piece of higher value than the sum needed for the usual purchases and sales?

In the eighteenth century Sweden, a poor country, got along with copper money, coined in large pieces, and England already showed the growth of its riches by the importance of its gold currency, while silver predominated in the other European monetary systems.

I believe, sir, therefore, that there is a monetary problem which is common to every rich and civilized people of our time; but that the solutions of this problem undergo certain variations in the case of peoples too far removed from each other in the scale of riches and civilization. That is to say, at the same time, that the superfluity of a great quantity of silver, about which some persons are anxious in case the gold standard should predominate, is not, to my mind, a necessary consequence of the agreement of the most advanced nations in the adoption of that standard.

It will always be necessary to have enough silver for small change among a people who accept the gold standard; it will also be needed as the dominant money of other nations less advanced, and perhaps, in proportion as the number of nations prepared for the gold standard increases, there will be other nations for whom the use of silver as money will be progress.

It is in this light, as it appears to me, that I regard the monetary problem in its generality, identical only among nations which are placed at the head of civilization.

The fluctuations in the price of silver in 1876 are not reconcilable with the legal relation between the value of that metal and the value of gold, as established by the laws of certain countries. This legal relation might be generalized; yet the fluctuations of price, due, for instance, to the variations in production, would still disturb it. The idea of arriving at stability by the mere hypothetical extension of the money market is a pure illusion. The English journal, the Economist, of the 30th of last December, in a vigorous article, seems to me to have given a heavy blow to the chimera of the pretended universal bimetallism and its marvelous effects. But it is important to observe that, in our society, advanced in riches, silver, as a metal for currency, has another disadvantage besides its instability of value. It has also the serious objection of being inconvenient.

Prices have become so high, and luxury has increased to such an extent, that to carry in silver all that is necessary for daily expenditures, especially when traveling, is for many persons a real annoyance.

And if the forced circulation of paper money did not conceal the exact situation of the country in this respect, we would perceive among ourselves, in the unlimited use of silver money, a cause of embarrassment which would be felt by every mind, and would lead to general complaint.

Correggio, it is said, died in consequence of exhaustion, caused by being obliged to carry for a certain distance the price of a picture, which was paid for in copper. Many of our artists would find an inconvenience, not so mortal, I hope, but still seriously felt, if, in a locality where bank-notes were wanting, they had to carry on their shoulders the price in silver of their pictures.

This inconvenience of silver as a monetary metal concurs with its instability in value to hasten the progress of several European countries toward the gold standard. It will explain to you, perhaps, sir, why, since your note was prepared, Belgium has emphasized more strongly than ourselves the suspension of the coinage of silver five-franc pieces, limiting it by law, as I had proposed to the French senate; and why Spain herself, belonging virtually to the Latin union, is preparing for the adoption of the gold standard, as was declared lately by Mr. Jacobs, in a learned address on the monetary question, delivered by him in Belgium.*

Holland is a little less advanced in this way than your learned note supposes. But the conversion of the silver standard to a gold one can only be accomplished there by degrees, all the more slowly as Holland is ambitious to extend this transformation, at least partially, to its Asiatic possessions as well as to its European territory. The United States of North America, sir, seem to protest against this movement. That country is so important in the world; its example in certain things is so powerful; it [Page 140] is so worthy of being considered even in the observations and studies of our Europe that you will excuse me if I call your attention a little to its monetary course, not only because of its place in modern civilization, but also because it has the advantage of being represented by you among our nation. At the time of the monetary conference of 1867, sir, North America, represented at that conference by Mr. Ruggles, took a lively part in the deliberations of that body. The proceedings of the international conference were translated into English in your country, and diffused to the number of 6,000 copies in your vast territory. An authorized voice from your Senate echoed the sentiments of the conference, and six years later, on the 1st of April, 1873, a law was passed which struck the silver dollar from your lists of moneys, and indirectly established the system of the gold standard.

The preceding year a message of President Grant, on the 4th of March, 1872, had even proclaimed gold the standard of value for the whole world. Austria, by its loan made in gold combined with its legislation founded on the silver standard, seems to conform to this principle. We note this incidentally.

Things followed their course in this direction in your country until the great depreciation of silver occurred in 1876.

Then a bill appeared in your legislation, adopted in the month of April last, which made silver legal tender up to the amount of fifty dollars.

This measure, though a little out of the precedents of legislation in regard to a single gold standard, in reality respected the principle of it perfectly. We ourselves proposed, in 1870, in accordance with the conclusion of the monetary inquiry, to allow silver to be legal tender as high as one hundred francs. But your people have taken a liking to the resumption of coining, which has taken place for small payments in specie, on the basis of this bill. An issue of 23,846,000 silver dollars in your country, in 1876, contributed to raise the price of silver throughout the world.*

The reaction against a single standard of gold has, since that time, declared itself emphatically in a proposition adopted in your House of Representatives, and which tends to the re-establishment of your old silver dollar as legal tender to an unlimited amount with the legal relation to gold of about 1 to 16. A committee of your Senate has the subject under examination; an amendment presented Mr. Sherman indicates its importance, and there appears to be a disposition to wait for an expression of public opinion before deciding.

Men who, like myself, hope earnestly for the renewal of the conciliatory movement of 1867 among the most advanced nations of the two worlds, entertain wishes on this subject which you can readily divine.

If new views invalidate those of the conference of 1867, it would be useful to have these views discussed in a new conference.

If, on the contrary, the temptation of, local interest, easy to understand, had influenced the disposition of the American Representatives in favor of home producers of silver, seeking to place under the best conditions a metal, the employment of which as money would revive its price, all disinterested observers would be struck with the purely ephemeral advantage of this measure. After the temporary profit realized by the producer of silver in the monetary system of the union, the price of silver would no longer have a durable support.

After the flow of an amount of silver into the monetary system of North America had once been realized, it would be found that an act of interior commerce had, in a manner, been accomplished, rather than an act of general and far-sighted legislation.

Viewed in this aspect, the legislation of your country would risk being less the principle of reaction against the gold standard than a relief offered temporarily to the enlightened nations who adopt it, and who would profit by it for the transformation of their system of metallic circulation.

Already, it seems, glancing over the statements in the English Economist in relation to the receipts of value in the market of London, that Germany avails herself with incontestable ability of the rise of price for several months past caused by the emission of American silver money. She is preparing to complete her reform by striking gold pieces of 10 marks and of 5 marks.

As to us, who, while reserving, or appearing to reserve, the question of principle, have for eighteen months suspended all admission of silver at the office of our mint, the affluence of gold in our mint seems to repay us for renouncing the coinage of silver. Since the first of January we have struck not less than 28,426,160 francs.

The progressive and intelligent political economists of Europe who are occupied with monetary questions will therefore be divided between the desire to see America, in the interest of general legislation, keep in the path of its legislation from 1872 to 1876 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 change.

It is for America, it seems to me, to choose between its past, in the progress now [Page 141] going forward, and a renunciation of that past, to the profit of nations who are more decided.

The first of these alternatives seems to me the only one worthy of her, of the part she played in 1867, of the intellectual luminaries she employs for her guidance, among whom you fill your place worthily.

You will, I trust, excuse me for having submitted these observations to your impartial attention in regard to an economic question which you have treated, and which holds your country in suspense—a question upon which the advanced nations of the two worlds can extend to each other a friendly hand if the grand instincts of modern democracy are everywhere guided by the torch of philosophy and of true science.

Accept, sir, &c.

E. DE PARIEN.
  1. See Le Français of November 22, 1876.
  2. See the Allgemeine Zeitung of Augsburg, February 7, 1877.
  3. See the Economist of the 23d of December, 1876.
  4. See the Economist of the 10th of February, 1877.