No. 23.
Mr. Kasson
to Mr. Evarts.
Vienna, February 21, 1878. (Received March 12.)
Sir: In a previous dispatch (No. 24,) I made allusion to the use of the silver standard in Austria, and to the resulting difficulties of the government in respect to the custom duties, placing it at a great disadvantage in the commercial relations of Austria with countries having the gold standard.
Since that time the imperial minister of finance, Baron Ton Hofmann, was good enough to give me the opportunity, while dining with me, to discuss the gold and silver question with him. I desired this opportunity because of his reputation as a man of sense, practical, more disposed always to walk than to fly, industrious, and careful in all his studies. Without entering into details, I present to you the substance of his views on the subject in question.
[Page 31]Austria, lie said, never had the gold standard, but always made silver the basis of her currency and credit. During the disturbances and troubles of 1848, they were obliged to suspend silver payments, and since then have depended on the government paper and the notes of the national bank. Since that time the government debt has largely increased, and the financial condition of the empire has been such that they have never been able to resume silver payments. As I stated in a former dispatch (No. 31,) the government circulating notes (including exchequer bills) amount to 400,000,000 of florins. The bank-note circulation amounts to about 300,000,000 of florins. Against this total paper circulation of 700,000,000 there is in the bank a specie accumulation of about 137,000,000. There is no accumulation of specie in the government treasury.
There is no specie in common circulation, except the silver contained in the small pieces of ten cents’value, and under. The only source from which the government derives a silver revenue is that of the customs, which is insufficient for the payment of its silver interest on the public debt. The residue required for that object is purchased in the markets. Nearly all her silver debt is held out of the country, about one hundred millions of it resting in Holland, and as much more of it in Germany, so that there is a continued exhaustion of the supply of silver. The prevailing premium on silver exchanged for paper is from five to six per cent.
Under these circumstances, the government has no present intention to resume silver payments. Baron Von Hofmann did not hesitate to say that in his opinion gold must be the future standard among civilized nations. But for the present it could not be exclusively adopted by all countries. He thought there must be a transition period of bi-metallic currency. He admitted the difficulties of the double standard, the mutual relations of the two metals changing so much in the lapse of years, the metal worth the least expelling that worth the most from circulation. This should, if possible, be avoided or remedied, so that there should be everywhere a recognized relation of value between the two metals for the purposes of commerce. He thought this could be best accomplished by an international congress, which should fix this correlation of the two metals for a definite period of time, say ten, twelve, or fifteen years. Such a congress could reassemble when the course of commerce, or of metallic production, should have overcome the influence of the international establishment of the relation of values, and should render a readjustment necessary. Without such international agreement for the common use or common relation of values, the country or countries having exclusively the standard of higher value must inevitably demand and absorb the better money from the others, and so grow rich at their expense.
I gathered from the tenor of his excellency’s conversation, that in his opinion Austria, though not now in a condition to resume her silver payments, would gladly take part in such an international conference.
I am, &c.,