Mr. Bell to Mr. Bayard.
The Hague, October 29, 1885. (Received November 10.)
Sir: Referring to my No. 55 of the 13th instant, in which I referred to an anticipated loss during the year 1886 of 5,000,000 florins by this Crovernmwt by leason of the proposed demonetization of 25,000,000 [Page 584] florins in Dutch silver coin of 2½ florins each (about equal to our silver dollar), I now have the honor to transmit herewith three copies of the law of the 27th of April, 1884, in the Dutch text, with translation.
By this law it will be seen that the minister of finance is so authorized, whenever he deems it expedient, to avail himself of the opportunity to demonetize an amount of silver coin not to exceed 25,000,000 florins and sell for gold the ingots (silver) thus produced through the agency of the Netherlands Bank.
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It seems that this law was passed at a time when this Government was about placing a considerable loan, and is supposed to have greatly strengthened the credit of the country, the legislation being regarded abroad as an indication of the desire of the Government to pay its indebtedness in gold. The minister of finance further intimated in his interview that such demonetization would certainly not take place during the coming year, as the Government reserve of gold at present was exceedingly strong.
The amount of silver which the Government may hereafter dispose of can he learned from an examination of the following statement, which may be relied upon as showing approximately the monetary situation in this country and its colonies. The Netherlands Government adopted the single silver standard in 1847. The law of the 6th June, 1875, introduced the gold standard, and fixed the relation between the two metals in the proportion of one of gold to fifteen and five-eighths of silver.
There has been coined in the Netherlands since 1840 a little more than 460,000,000 florins in silver money, of which amount a large proportion has been sent to the colonies. Silver money are pieces of 2½ florins, about equal to our silver dollar; 1-florin piece, about equal to 40 cents of our money; and 50-cent pieces, equivalent to about 20 cents in our coin. The gold money which has been coined in this country since 1875, the date of the introduction of the gold standard, amounts to 74,303,910 florins, and is coined only in 10-florin pieces. The monetary circulation of this country was as follows at the commencement of 1885: Silver money in circulation in the Netherlands in the neighborhood of 150,000,000 florins. Silver money in circulation in the colonies, in the neighborhood of 200,000,000 florins; the balance, it is estimated, has been consumed in manufactures and for ornaments. Gold money in circulation in the Netherlands, about 15,000,000 florins. Gold money deposited in the Bank of the Netherlands January 1, 1885, 19,700,000 florins on the first day of October, 1885, 22,600,000 florins, in addition to 26,000,000 florins in ingots. Gold money in circulation in the colonies, about 5,000,000 florins. Copper money in circulation in the Netherlands, about 1,700,000 florins.
There are no official data to show the amount of copper money in circulation in the colonies, but it is believed to be in the neighborhood of 18,000,000 florins.
In addition there are in circulation in the Netherlands about 7,500,000 florins, in odd pieces of the denominations of 25 cents, 10 cents, and 5 cents, in debased silver. The amount of these odd pieces in circulation in the colonies is not known in official circles here.
There were also in circulation January 1, 1885, bank-bills, not covered by gold or silver, amounting to 77,500,000 florins; on October 1, 1885, this sum had been reduced to 50,500,000 florins.
The Netherlands Bank is not a Government institution, but is nevertheless the designated depository of the Government, on account of [Page 585] which fact the Government has a commission, consisting of fifteen members, who inspect the affairs of the bank. * * * The holders of the bills of this bank can at any time demand their redemption in specie but not in gold.
I have, &c.,