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Page 18
[Illustration: The above diagram shows the relative annual production of
gold and silver during the bimetallic period in France. The ratio given is
the commercial ratio, that of the mint being 15.50 to 1. Note the
marvellous steadiness of the commercial ratio and contrast it with the
enormous fluctuation in the relative annual production of the two metals
during this period.]
To this should also be added the fact that French coins would have a
slightly less value in other countries than the coins of those countries,
but it is not easy to estimate the sentimental difference this would make.
From the enactment of the law of 1803 to the limitation of the coinage in
1875 France coined 5,100,000,000 francs of silver and 7,600,000,000 francs
of gold, or $1,020,000,000 of silver and $1,520,000,000 of gold, very
nearly, or 40 per cent. of the total amount of silver and 33 per cent. of
the total amount of gold produced in the world during those years.
It is further to be noted that, whether gold or silver was the dearer
metal at the ratio of 15-1/2 to 1 at any given time, France at that time
had more of gold and silver per capita than any country in the world, and
that, despite the enormous inflow of the cheaper metal, she held the
dearer and absorbed what now seems an astonishing amount of the cheaper.
Thus, in 1822 the imports of silver into France exceeded the exports by
125,000,000 francs, and in 1831 the amount had risen to 181,000,000
francs, and then it fell off and did not reach the latter sum again until
1848.
On the other hand, in the eight years 1853-60 there was a net import into
France of gold to the value of 3,082,000,000 francs, or $616,000,000; and
in the same years a net export of silver to the value of 1,465,000,000
francs, or $293,000,000. Thus in the short space of eight years France had
made monetary, or, rather, metallic transfers amounting to $909,000,000,
and that without a quiver of her financial system, and scarcely a
perceptible trace of the effects of that financial storm which swept
America, England, and Central Europe with such destructive fury in 1857-8.
It further appears that, despite the enormous import of gold, the
subsequent export was comparatively small, and thus, such was the
wonderful absorbing power of the nation under the free coinage law of
1803, that France came out of each successive financial storm with an
increased stock of the precious metals, and more than once has the Bank of
England been compelled to apply to France for the specie to arrest a
destructive panic growing out of an insufficient amount of coined money
upon a safe basis and an overissue of supplemental or faith money.
By the year 1860 it was supposed that the danger of the world being
"flooded with gold" was substantially over; and during that decade France
not only sustained the double standard single-handed and alone, but did it
against the tremendous pressure due to the demonetization of gold in
Austria, Germany, and other countries. It is not possible to say with
certainty how far gold would have cheapened, or, to speak in the current
language, how high the ratio of silver would have become, had France
during the decade abandoned her bimetallic system; but it is certain that
the disproportion would have been enormous, undoubtedly very much greater
than the present disproportion in the market between silver and gold,
resulting from the demonetization of silver. M. Chevalier gave it as his
opinion that the ratio would sink at least as low as 8 to 1, that is, that
gold would be worth but half what it was rated at in relation to silver in
the American coinage, and this he believed would certainly happen, despite
the power and willingness of France to maintain the old ratio. He did not
venture to say how low the ratio would sink if France abandoned her
policy, but he evidently looked forward to a time when gold would be
practically too cheap for money.
Years afterward, in writing as a philosopher rather than an advocate, he
took more rational ground, and compared the action of France to that of a
parachute which retarded the fall of gold. The maximum effect of the
enormous gold inflation of 1848-65 was to create a disturbance of less
than five per cent. in value of the metals in countries outside of France.
During all the years that the law of 1803 was in practical force the
variations as shown by a diagram seemed but trifling, despite the enormous
over-production of silver for many years and of gold for many other years,
and yet, immediately after 1873, although ten years were yet to elapse
before the world was to produce silver in excess of gold, almost instantly
the diagram shows the downward trend of silver far, far in excess of any
previous experience.
How was it through all these years with the industrial and financial
condition of France? It would indeed be little to the purpose to prove
that she had maintained the metals at a parity by free coinage, if, in the
meantime, her people had suffered loss. Monometallists tell us that not
only is bimetallism impossible, but that the attempt to maintain it is in
every way hurtful, in fact, disastrous. They point us to the fact that
England is the clearing house of the world; that those whose currency is
not assimilated to that of England are subjected to enormous losses in the
exchange, resulting from fluctuations; that by attempting bimetallism a
nation puts itself in the second or third rank, and that the results are
in every way bad. Well, all those conditions applied to France. She, like
the United States, may be considered as regarding England in the light of
the world's clearing house, and her currency may be said to have
fluctuated, as they declare ours would, with bimetallism. What, then, have
been the general results to France? What effect has it had upon her
commercial, social, and industrial development? On this point let us
return thanks that the testimony is universal. No other nation in the
world has made such stupendous progress in the general improvement of her
people as France has made since 1803. No civilized country probably had
sunk to such depths of popular misery as had France at the beginning of
her revolution, and we can hardly believe that the subsequent fourteen
years of war and internal turmoil had greatly improved her condition when
the policy of 1803 was adopted.
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