to Mr. Evarts.
Vienna, October 29, 1878. (Received November 14.)
Sir: In order to reply to your No. 59, received on the 25th instant, I propounded the inquiries contained in your note to Baron Hofmann, [Page 37] the Austro-Hungarian minister of finance, at the earliest practicable moment.
I have now the honor to reply, in accordance with information furnished by him, as follows:
I. “Whether the Austrian paper florin is redeemable in any metallic currency, and, if so, in what?”
Originally it was redeemable in silver, which has been the legal standard in Austria to the exclusion of gold. But the events of 1848 compelled the suspension of specie payments in that year, and this practical suspension was afterwards maintained by a law authorizing and continuing it, which law is still in force. The Austrian paper florin is, therefore, not in fact redeemable in any metallic currency, and has a daily fluctuating value.
II. “Whether the Austrian silver florin is a coin in actual circulation at the present time on which trade transactions are based?”
The transactions of trade in Austria since the suspension of specie payments are based on paper, not on silver. The silver florin is not in circulation. I have not seen during my residence in Austria a single silver florin piece, nor any Austrian coin in circulation of higher value than 20 kreutzers (10 cents). Within the last few days, however, silver is quoted as at par with paper in Vienna, and it is reported that small amounts have been shown in private hands. The relation between silver and paper is always fluctuating, and is a mere affair of market rates.
III. —“with a statement of its (the silver florin’s) accepted value in Austria as compared with that of the 8-florin gold piece.”
The 8 florin gold piece is not in circulation, and has no fixed value in relation to the silver florin. Gold never having been the legal standard of money in Austria, this piece if it appears is bought and sold as merchandise. To-day its ratio to the silver florin is given as 8 gold to 9.40 silver; that is, it requires 9 florins and 40 kreutzers in silver to buy an 8 florin gold piece. It is held equivalent in value to a 20-franc gold piece, and is so treated in the market. Austria has not fixed by law or treaty the ratio between gold and silver.
Perhaps I ought to repeat in this connection what I have before written to the Department (see No. 24, Inclosure B, Article XIII), that by the new Austro-Hungarian tariff law, which will take effect on the 1st of January next, all duties are payable in gold instead of silver as heretofore. Two needs of the government have compelled this action: 1st, To secure the loans which it required, it was obliged to issue a gold rente, the annual interest of which they were compelled to provide for by buying gold in the market at a high premium for silver, entailing a double loss; 2d, in their international commercial treaties the equality of tariff dues was destroyed as between this silver-standard empire and the gold-standard countries, like Germany, to the great injury of Austrian producing interests.
Gold must therefore be bought by Austrian importers after the 1st of January to cover the duties on their goods, unless the government allows the option to pay equivalent silver, the ratio of which in that case is to be fixed from time to time by its officers.
I trust the foregoing fully responds to the request of the Secretary of the Treasury, as communicated by you. Further information, if desired, will be found in my No. 40, relating to the same subject.
I have, &c.,