No. 177.
Mr. White to Mr. Evarts.

No. 12.]

Sir: I have the honor to transmit a translation of portions of speeches recently delivered in the Reichstag regarding the standard of coinage in the German Empire. The question asked of the government was doubtless prompted by a recent debate in the English Parliament, in which Mr. Goschen made certain statements, said to be based upon the best authority, regarding the intentions of the German Government as to changes in the currency. The debate in the Reichstag was very long, Prince Bismarck making two speeches. From the beginning he expressed great regret that the question had been asked, and his remarks were largely concerned with the attitude of those who had asked the question; hence the debate took a strongly personal character. I spare you as much of these personal details as possible, giving only those parts of the debate of direct interest to our own government. There are some discrepancies between the reports of the speeches in the newspapers, but I have compared different accounts, and think the translation is as close as possible.

I have, &c.,

[Inclosure 1 in No. 12.—Translation.]

report of debate in the reichstag.

With reference to a report that the German Government proposed to suspend the sale of its silver and adopt a double standard in its currency, the deputies Dellbrück, Bamberger, and Harnier asked: “Does the government intend to make any changes in the present laws regulating the currency?

In the course of a reply the imperial chancellor, Prince Bismarck, said:

“I do not hold it to be advantageous to the State that a question of such weight and of such importance to our credit, trade, and manufactures should, without the least occasion, be dragged forward to be discussed in academical style, in order that the government might be placed en demeure, and be obliged to make an official statement on the subject.* * *

“When fifty-eight gentlemen of the position of those who by their signatures have supported this question admit that they are skeptical of the aims of the government, then the opinion must take root that, as they are initiated, have technical knowledge, know more than the general public do, there must surely be reason to doubt the government; otherwise, financiers and statesmen of their position, men who have daily had confidential intercourse with each of the ministers who might readily have dispelled [Page 386] all their misgivings, would never have put any such question without just cause, would never have expressed doubts, would never have sanctioned the expression of doubts which are but created by being expressed.

“The problem of banishing these doubts which they have themselves created, they now place before me, adding the remark that mistrust is antagonistic to our industrial prosperity; an observation in which I quite agree with them, Yet, if they are convinced of this, they should not have expressed their mistrust by a question supported by so numerous an array of signatures. They now expect me, they put back upon me, the task of clearing out of the way a difficulty of their own creating. But if I say, in reply, it is not my intention to change the currency laws, is it not possible that another may have that intention? If I say I am not convinced of the advantage of a change in our coinage, might I not by a closer study of the question, by hearing the explanations of technical men, by the results of an adoption of the change by other countries, be brought over to quite another opinion? Is my simple negative to the effect that at present it is not my intention to change the coinage, adequate to destroy so far-reaching and so strongly pronounced a misgiving as that supported by so important and imposing an array of witnesses as the fifty-eight gentlemen here represented by their signatures?

* * * * * * *

“In reply to this question I can only supply you with the facts as to the business position of the matter as it comes to my knowledge. I can assure you that from no quarter, neither from the federal council nor the Prussian ministry, has there come any proposal to change our coinage; nor has the question whether a change be necessary ever been touched upon from any side by a single word. The one connecting fact, the crystallization point, around which really this whole legend inclosing the question has formed itself, consists in the request I made to the bank directors that they discontinue for a time the sale of silver, because I am responsible for the continuance of and for the increase in the losses we are suffering, from the fact that the price of silver has fallen to 47, while its nominal value is 61, and because I refused to be any longer personally responsible for this.

“It was my intention in doing this to take the responsibility for the suspension upon myself until next session, for I would not involve the suspension with other new and important questions; and then next session to lay the facts before you in order to discover whether the legislature would give the heads of the executive directions to follow a new policy or to continue that which it has already sanctioned. I had thought that my not introducing the matter in the present session would have gained for me your thanks, as, in my opinion, we already have quite enough business and business quite important enough.

* * * * * * *

“What, however, has connected itself with this suspension of the sale of silver is the great displeasure of those bankers and other business men who gained by that sale. These ‘gentlemen financiers,’ as they are called in the letter of the English ambassador, or rather these financiers, and so far as I remember not financiers in Germany generally, hut financiers particularly in this capital—these gentlemen have made it appear to the English ambassador that they know more about the intentions of the government than anybody else. My honored friend and diplomatic coworker, Lord Odo Russell, dutifully sent these reports, when they reached his ears, to England, just as our representatives abroad very often send us, as such, reports current in London or Paris concerning the intentions of the English or French Governments; and in all this there is nothing extraordinary. But what does surprise me is the fact that a rumor with no better authentication than the present should have formed the subject of public official indorsement. I, for my part, have always, when reports have gone the round of the town of the intentions of a foreign power, and especially of a power having such close friendship with us as the English, when such reports have reached me I have held them back until I had verified them. It is not for me to suggest reasons why the English Government should have made such use of these reports, coming presumably to them in a ‘private letter’ from Lord Russell, so prominently as they have done. But I cannot admit that even if the English Government had observed a gradual going astray on our part in certain particulars that that would practically change, so far as our state government is concerned, the character and effect of the interrogation now put.

“I wish very much that the question had never been asked, or that I had first been asked, as might easily have been done, and as is often done by many of my most honored acquaintances, who have daily access to me. What kind of answer will you make; will you reply with a categorical ‘No, under no circumstances whatever’? But that, too, would have had its inconvenience as a reply. We would like the price of silver to rise. If, however, I reply ‘No’ to the question it will be said, ‘Good, we will wait; they must come to us with their cheap silver, as they evidently intend to come by and by, to sell it; we will take care that the price does not rise; we can raise a loud cry at every private sale that can possibly be traced to the German bank or to [Page 387] the German Government, and thus we will soon pull down the price of silver again, the moment the government desires to sell a single lot of the melted-down silver they have still on hand.’

“That, then, is the embarrassment in which these gentlemen have placed me by their question; and I should have been very thankful had they spared me it. No member of the collective federal council or the Prussian ministry has any doubt, such as is suggested by the question, of the stability of our legislation. I, however, will take leave to draw the attention of the gentlemen to the fact that no change whatever can be made in the law without the concurrence of the Reichstag. Every legislative proposal must receive its sanction. Our present coinage principles are based on law, and if we desired to introduce a new law, you need not fail for want of time and means to prepare an opposition, for it would soon attain publicity on the first mention of the subject in the federal council, or (which would be the surest way) through a circular addressed to the various governments whose opinions would have to be taken. I can assure you that hitherto I have not sounded a single German government upon this question, not even the Prussian, and that in spite of the doubts which are being loudly expressed, and of the newspaper reports (upon which, for my part, I place no reliance whatever), I never once saw any need to consult my Prussian colleague and finance minister on the matter.

* * * * * * *

“If I had any desire to change the law, the very first thing I would do would be to consult the Prussian minister of finance, for without the seventeen Prussian votes I can do very little, and, of course, for those I should be dependent on the Prussian finance minister.

* * * * * * *

“I beg of you, gentlemen, to put to rest any doubt as to the stability of our legislation by passing over this question; not necessarily to the orders of the day, but by preventing its giving rise to any further discussion. If, however, you should desire it, I am ready for discussion, but I ask you, in any case, in order that you may be in a position to judge whether I did rightly in suspending the sales of silver to wait and hear the arguments of the bank president, which led me to that step.”

[Inclosure 2 in dispatch No. 12.—Translation.]

report of debate in the reichstag.

Speech of Herr von Dechen, commissioner of the federal council and president of the Reichs Bank.

Gentlemen: If I had to attribute a motive for the suspension of the sales of silver, I should be obliged (I confess much against my wish) to examine more closely the result of the sales hitherto made. I will, however, restrict myself to the most important points in the question.

Up to the present we have melted down silver coins to the amount of, in round numbers, 629,000,000 marks, by the sale of which we realized 539,000,000 marks, about one-third being sold by the German Bank during the first four years since 1873, and the remaining two-thirds in the years 1877 and 1878, by the State Bank. The loss on those sales was 141/5 per cent.; that is, 89,484,073 marks; of this, however, 24,572,000 marks must be deducted for deterioration, cost of Coinage, &c., leaving the real loss on the sales 64,911,980 marks. The silver was sold at an average price of 54⅛ pence per standard ounce, cost of sale deducted. Since that time the price of silver has fallen considerably, and during the last seven months, between October 14 and May 19 last (the day on which the sales were suspended), the price was only 50 pence per standard ounce, and since then it has fallen to 48⅞ pence. That gives a loss on our sales of 21 per cent., and this we have had to bear. On the silver sold within the present year, amounting to about 28,000,000 marks, we have consequently had a further loss of 7,000,000 marks. Thus our entire loss has been 96,500,000 marks, or a net total loss of 72,000,000 marks. What quantity of silver the country has still to sell, and what it will yet lose upon it, cannot in the nature of things be statistically stated, for no one can know precisely how many of the thalers coined since 1750—and the whole matter has to do with thalers alone—how many of these thalers have already been melted down or lost. A tolerably safe estimate, however, can be made from our experience, in the withdrawal from the currency of the old two-thaler pieces, which once served in the place of the present thaler. It was found by that withdrawal that 17 per cent. of those coins were never returned—at least not within the specified time. If we apply this result proportionately [Page 388] to the thalers now current, we find that we have yet to receive and to sell about 476,000,000 marks, upon which there would be a further loss of between 90,000,000 and 100,000,000 marks, if we sold the silver at the price-we sold our silver during the last five months; as undoubtedly we should have to do.

Gentlemen, I am used to formidable calculations, and I can readily understand that reforms in coinage cannot be made without heavy sacrifices; but I still am startled by these figures, and believe that there are few here who do not share my feeling in that respect.

It is possible that this estimated loss may be reduced in the reality, but this reduction cannot be considerable. In 1873, when the coinage law was discussed here, the price of silver in London stood at, as it had done for the last twenty-five years, between 60¼ and 62 pence. As a result of that discussion, it sank from 61 to 59¾ pence, and, although a further reduction was then expected, I do not believe that any one anticipated so enormous a fall as has occurred. I have consequently considered it my duty to call the attention of the imperial chancellor to the matter, and strongly to recommend to him a suspension of the sale of silver.

That this was a measure well adapted to the end in view, has not yet, I maintain, been disproved. Whether it is to result in permanently raising the price of silver to its former height is, of course, an open question. Financiers of all countries have been saying that it is chiefly our fault that the price of silver has fallen as it has done, because we put a large quantity into the market, and we are told that if we cease to send out enormous quantities, the price would long ago have reached its former point again. Whether that be true or not, will now soon be proved. We shall, in any case, lose nothing by suspending our sales, as we should, even without any formal suspension, have sold none of our silver, because the only large buyer during recent years, Austro-Hungary, has withdrawn from the market.

Within a few days the published price of the standard ounce has risen about 6 per cent. (from 49⅞ to 53 pence), and the price maintains itself at between 52 and 53 pence. This shows how great has been the effect of the German silver poured into the market, and that we shall do well to wait a while to see what the future state of the market will be.

I believe that the saving of 100,000,000 marks, or even 80,000,000 marks is quite enough to warrant us in thus waiting; and in my opinion you will do well in supporting the policy of the government on this point. You would do the country and the whole world real service if you permanently saved the silver market from the fear it has of German silver; and, further, if you allow no more silver to to be sold, Germany is losing nothing by the thalers still among the currency, and I am convinced that even South Germany would bear with them a few years longer when it is seen that we can thereby save the country a considerable expense; and foreign countries will thank us if we take the burden, which has for more than six years weighed heavily upon all classes and conditions, permanently away from them.

I can, in conclusion, only again earnestly recommend that the arrangements which have been adopted be left as they are.