THE CONCURRENT CIRCULATION OF THE TWO METALS IN FRANCE, UNDER THE RATIOS OF 14% AND OF 151.

In his second Report on Money, 1803, Gaudin, the French Minister of Finances, under whose guidance the present Monetary System of France was established, says:

"It has always been thought that the relative value of the two metals ought to be regulated in such proportions to those established in neighboring countries, that the exportation of one or the other metal can offer no bait to the cupidity of speculation "

It was mainly with a view to secure this concurrent circulation of the metals that the various French ratios were established, but in two instances, as Gaudin observes, the intention seems to have been to give Gold a slight preference over Silver; namely, in 1640 and in 1785; while in the intervening period, in 1726, the selection of a new ratio was made with the impartiality to which, according to Gaudin, the choice made in 1785-1803 can not lay claim. In 1640, Germany and Milan observed the ratio of 12; the Low Countries and Flanders, 12; England, 13; Spain, 13; and France established the ratio of 133. In 1726, the ratio of 14g was established, which remained in force until 1785, when, for the reasons given on page 257, De Calonne recoined the French Gold coins at a rating considerably above their market value.

Under the ratio of 1726, 149, it appears that France enjoyed in full measure the desideratum of concurrent circulation, which during that period was denied to England by her high ratio of 15.21.

De Calonne says that during a long course of years (pendant de longues années) after 1726, France "kept in circulation a sufficient quantity of either metal."

In alluding to the fact that the rating of Gold in 1726 was low, Gaudin observes (in his report) that between 1726 and 1785 no inconvenience was observed from the difference until the disappearance of Gold took place, which he implies must have become noticeable only shortly before the latter date. He repeats that the failure in 1726 to overrate Gold had not produced any sensible effect (loss of Gold) in the period of sixty years.

In the nineteenth century France has occupied a monetary position differing in important respects from that she held in the eighteenth. At the close of the latter England surrendered her Bi-metallism in Europe; and France, adopting an English idea, inaugurated liberty of coinage, without, however, making coinage gratuitous, but reducing the mint charge to the actual cost of coinage.

In the mean time the United States have gradually assumed the monetary importance which a hundred years ago belonged to Spain and Portugal; but maintaining as they do a stock of metal equal to but a fraction of the French, and far inferior to the English stock, their free Bi-metallism being at ratios conflicting with the French, has not, even in proportion, aided that country in maintaining the steadiness of the relative value of the metals.

The events most calculated to disturb the par guaranteed by French free coinage of both metals as full legal tender were the resumption of specie payment in England in 1816-1823, causing a great demand for Gold; the adoption of the ratio of 16 in the United States, 1834-37, which caused a replacement of Silver by Gold; and the influx of Gold from California and Australia (1848-1860), which was so great as to cause not only a depreciation of Gold as compared with Silver, but a sensible depreciation to a greater degree in the general value of money as expressed in the averages of price in the civilized world.

Asia, not accepting Gold as money, naturally took its portion of this metallic inflation in the Silver which the Western World, rich in new Gold, was ready to export.

The concurrent circulation which Gaudin aimed at in 1803 was not, therefore, obtained in complete equality, under the presence of the drain of Gold before 1830 to England, and before 1850 to the United States, and the drain of Silver after 1850 to the East.

For some time before 1850 Gold circulated in France chiefly at a premium, but when the years reached 1860, France, parting with much of her Silver in exchange for Gold, felt the same drain of Silver change under the ratio of 153 which, under the ratio of 16, had, in 1853, compelled the coinage of Silver tokens in the United States.

It is often asserted that between 1855-1865, France was deprived of the concurrent circulation of the two metals, Silver disappearing entirely, so that her Double Standard led to a complete alternation of the metal in circulation. The investigation, however, into the French circulation, made under the direction of the French Ministry of Finances in

Angust last (Exhibit A, 7th session, page 172), reveals facts which oppose this assertion. Out of 824,987 5-franc pieces which were found in the offices of account, (19,511 in number) of the administration of the French Treasury, 517,700 had been coined before 1851. If the same percentage (.62) holds good of the entire French stock of 5-franc pieces, native and foreign (which of course cannot be affirmed with certainty), it would appear that France holds to-day perhaps 300 millions of French dollars, coined before the drain of Silver commenced for France, or about 30 per cent. of her total coinage of these dollars since 1795. Has any large part of this stock been held as coin in Eastern countries and now been returned to France? Did a large proportion of these dollars serve as money in spite of the premium of 1, 2, 3, or even 4 per cent. which was sometimes paid for Silver in the metal-market exchanges between 1851 and 1865, or did they circulate at a premium over Gold? In any case it appears that the assertion that the alternation of metal was complete is hardly justified. It is, however, but just to recall that, in all probability, these elder coins had lost some fraction of weight by wear, and hence offered less profit for recoinage into rupees than the newer coins. It is also probable that the presence of these old dollars is an indication of a late event of considerable interest in the economic history of France. It has been asserted that, in late years, the habits of the French people in the matter of hoarding have undergone a change; that in the country districts the small farmers, instead of hoarding their dollars, invest them. The popular subscription for the national debt for the war with Germany, and the, for France, unfamiliar presence of bank-notes in the country circulation since the war, may naturally be credited with diminishing the habit of hoarding. Whether the change of habit has really gone so far as effectively to mobilize a large proportion of the hoards of France has not been ascertained.

MONETARY PROPOSITIONS OF SIR JAMES STEUART.

[Extract from his Inquiry into the Principles of Political Economy, Book III, Chap. IV.]

METHODS WHICH MAY BE PROPOSED FOR LESSENING THE SEVERAL INCONVENIENCES TO WHICH MATERIAL MONEY IS LIABLE.

I. In this chapter I shall point out the methods which may be proposed for lessening the inconveniences to which all Coin is liable, in order thereby to make it resemble as much as possible the invariable scale of ideal Money of accompt.

To propose the throwing out of Coin altogether, because it is liable to inconveniences, and the reducing all to an ideal standard, is acting like the tyrant who adjusted every man's length to that of his own bed, cutting from the length of those who were taller than himself, and racking and stretching the limbs of such as he found to be of a lower stature. The use of theory in political matters is not merely to discover the methods of removing all abuses, it must also lend its aid towards palliating inconveniences which are not easily cured.

The inconveniences from the variation in the relative value of the metals to one another, may in some measure be obviated by the following expedients.

First, By considering one only as the Standard, and leaving the other to seek its own value like any other commodity.

Secondly. By considering one only as the Standard, and fixing the value of the other from time to time by authority, according as the market price of the metals shall vary.

Thirdly, By fixing the standard of the unit according to the mean