A HISTORY OF CURRENCY.*

IT is a favourite argument of the Bimetallists, that the sys- tem which they advocate—of gold and silver current side by side without restriction as to legal tender—is no new thing, since it was in vogue throughout Europe during the period in which modern nationalities were struggling out of barbarism into civilised enlightenment, and would have still held sway, as they urge, if it had not been for the insular stupidity of Great Britain, which severed the link between the metals in the beginning of the present century. Such an appeal to history is a little dangerous, for a fact like this is capable of interpretations varying according to the bias of the exponent. To the ordinary student of the progress of civilisation it seems astonishing that any system or practice which has been over- thrown after centuries of domination, can be brought forward as worthy of reinstatement. One of the most comforting lessons of history is the demonstration which it presents of the infinite difficulty of overthrowing an existing institution. Just as an old house will stand up long after it ought to have been in ruins, according to all the laws of mechanics, so the world makes a shift to go on with the old machinery, constitutional • The History of Currency. 12'2 to 1591. By W. A. Shaw, 14.k., late Balmier Fellow of the Owens Col:ege, Fell..w of the Royal Historical and /Loyal Btatistiall Societies. London: Wits ns and Milne.

and economic, long after it has been condemned to be sold as old iron by the sentimental Radical. This principle is so strong, that one would say that the most difficult thing in the world is to bring any system into being, and that the difficulty of getting rid of it is a very good second. So that on grounds of historical philosophy, we should require an overwhelming weight of argument before being convinced of the desirability of what has been and yet has ceased to be.

Bimetallism, however, is in this position. The name is comparatively new, but not the system. Europe was bimetallic, as M. Jonrdain talked prose, without knowing it. Under these circumstances, it is most important that, before we consent to reintroduce it, we should examine the practical results of its working, and find out why it was that a system which is now pat forward as a remedy for all existing commercial maladies, should have been rejected by those who had the felicity to live under its domination. This investigation has been

made easy by the publication of Mr. Shaw's admirable History of Currency, which traces the course of monetary events from the middle of the thirteenth century, when gold

was reintroduced into the European currencies by the minting of the gold florin at Florence, down to the present time. He confines himself strictly to the question of the metallic currency, without complicating his narrative with any account of paper and other fiduciary issues. Infinite patience and an extraordinary amount of toilsome research have evidently been devoted to the compilation of this work, and the wealth of information that it presents, and the remarkable complete- ness and clearness with which it deals with a highly compli- cated subject, mark it as a notable addition to English economic literature. Mr. Shaw divides his history into three periods. The first extends from the middle of the thirteenth to the end of the fifteenth century. At this time the one notion with regard to currency was the belief that, somehow or other, by fair means or foul, as much coin as possible must be grabbed by each of the several nations :—

" The rulers of that age had only one idea,—the maintenance or increase of the treasure of the realm, first for military purposes, and then for trade ; and their mental horizon was limited by the

boundaries of each their little dominion In any system so rough and so non-uniform as that of Europe in the fourteenth century, any variation of one metal served as a vantage-point against the other, as a lever to press upon and force it out The two metals served simply as fulcra to each others' oscillations, to the undoing of both."

The want of uniformity was such that we find at one and the

same date a ratio between the metals of 11.15 in England, 11.12 in Germany, 11 00 in France, 10.58 in Italy, and 9'82 in Spain. The result of this state of things was a condition of hopeless chaos, in which the bullion dealers, Italian and Jewish, who understood what was going on, enriched them-

selves at the expense of all other classes of the community. The helpless rulers who saw their realms denuded of good coin, could only make futile efforts to stay the process with puerile measures of restriction. Merchants were hanged, drawn, and quartered for exporting coin, but in vain; and Charles V. " finding his Kingdom filled with depreciated imported specie, while all the good native pieces had been drawn out of the land, sought and obtained from the Pope, 1372, a Bull of Excommunication against neighbouring powers who should counterfeit his monies."

The second period extends from the beginning of the sixteenth to the middle of the seventeenth century. The discovery of America and the flood of precious metal which was poured into Europe from the new Western world, began to affect the currency position about the year 1520. For nearly half a century the production of the two metals kept fairly level ; but after that " the relative and absolute produc- tion of silver increases enormously over that of gold, and the ratio is disturbed. The inequality of the rate at which this change of ratio spreads to successive countries, and is adopted in their various Mint regulations, is the bnllionist or exchanger's opportunity, and the disastrous effect of their activity results in the crisis of 1570 in France, and 1622 in England and Germany." Mr. Shaw considers that there

has been no subsequent crisis in European history fitly comparable with this one. And certainly the details of its history show that when we talk of crises nowadays, we do not really know what the word means :- " In February, 1612, Locke informs Carleton money is very scarce. In the clothing counties the poor have assembled in troops of forty or fifty, and gone to houses of the rich and demanded meat and money, which has been given them through fear. The Lords ordered the clothiers to keep their people at work, but as they complained that they cannot sell their cloth, usurers and monied men, though not in the trade, are ordered to buy it' In March the Justices write from Gloucestershire ; 'The people begin to steal, and many are starving; all trades are decayed. money very scarce.' The ordinary taxes of the country could not be levied, or, when levied, proved only a fraction of the estimated. amount. ' Wools and cloth are grown almost valueless,' write the- Justices of Somerset on the 15th of May, 1622, ' and the people desperate for want of work' The expectations of outbreaks were• great, and at Nottingham musters were held, and the trained bands ordered to be ready for instant service to suppress riots, if any occurred So great was the want in the country districts that a proclamation was issued ordering all persons of quality in. London and Westminster to go to the country, and reside on their estates, for the relief of the poor in the dearth."

Such were the chief characteristics of the monetary history of Bimetallic Europe during the two first periods, from 1252 to 1660. Ever varying ratios between the metals, constant alterations of the legal ratio to bring it into accordance with• the conditions of the market, and, in spite of all, recurring periods of disaster, due to the depletion of the national

currencies by the assiduity of the bullion-dealers. No doubt this is all irrelevant to the modern aspect of the question. For there was no international agreement, by which it is• asserted that a ratio can be fixed,—when one can be found which will be acceptable both to us, who have no silver, and to France and the United States, which have masses of it. But the third and last period, which brings the history up to the present moment, is very much to the point. For it dis- poses, once and for all, of the Bimetallist argument which maintains that France, by remaining true to the double standard, secured a steady ratio between the two metals for the world at large. Says Mr. Shaw :-

" At no point of time during the present century has the actual market ratio, dependent on the commercial value of silver, corre- sponded with the French ratio of 151, and at no point of time has France been free from the disastrous influence of that want of

correspondence between the legal and the commercial ratio After three years of fluctuations, 1803-6, now above and now below, the ratio sinks persistently below for seven years, 1807-13, touching the lowest point (a ratio of 16'24) in 1813. For the succeeding five or six years (181319) the ratio was as consistently above the legal rate, though with less violence and width of divergence. From the latter year, 1819, up to 1850, its course was undeviatingly below 154; then from 1851-67—the period, i.e., of the great gold outputs of Australia and America—as un- deviatingly above. From the last-named date until the close of the bimetallic system in France, and, indeed, up to our own days, the course of the commercial ratio has been again unbrokenly below the 151 ratio."

These facts and figures are strikingly illustrated by a diagram- with a straight line across the middle marking the legal ratio, and another line, representing the actual market ratio, dancing gaily up and down above and below it. Still more remarkable are the figures of the importations of the precious metals-

into France during the same period :—

" From 1830 to 1850, while the ratio remained continually below the legal 151, there was a profit on the import of silver, and a persistent and heavy import took place There was not a single year that was not accompanied by this import, and over the whole twenty-two years the total of importations reached the enormous figure of, approximately, 92 millions sterling. It must be clearly understood that this sum represents not the gross, but the net importation or balance of imports over exports, and that the money passed into the currency of the country, taking its place as such, and displacing gold Tani passe."

After the gold discoveries in 1852, the reverse process set in. The ratio rose above the legal 154, and the next fourteen years witnessed an importation, on balance, of a hundred and

thirty-five millions sterling in gold into France. And when the tide turned again in 1865, France was once more at the- mercy of a flood of silver, so that "from 1865 to 1875, one year before the abandonment of the coinage of the five-franc piece, and the consequent relinquishment by France of the Bimetallic system, her net imports of silver amounted to fifty- six millions sterling." Such was the penalty paid by France for her adherence to the Bimetallic system. Her circulation consisted only of the metal which happened to be cheaper for the time being, and her vaults are still stored with a pile of depreciated and unsaleable silver, a fitting monument of the futility of an attempt to stand against the laws of supply and demand.

We have treated Mr. Shaw's book only with regard to its bearing on the currency discussion of to-day, because• the light which it throws on this matter gives it its paramount value at the present moment. But it is far more than a mere handbook for the supporter of our single standard. Its pages are covered with information as to the various coinage- systems of medixval and modern Europe, and its tables and appendices contain a mass of suggestive material for the economic student.